Four weeks of target cover for every item, even though replenishment and safety stock together cover fifteen days.
The target cover is set once for the whole product group, usually based on the worst delivery anyone can remember. Anyone who wants to change it has to calculate two figures separately: the replenishment lead time from recent deliveries and the safety stock from sales variability and lead time variability. With 180 items per product group, someone does the maths for the twenty most important and never for the rest.
180items plannedThat is how many lines one buyer manages in the dry goods product group.
28 daysblanket target coverFast movers and seasonal items are set to the same cover.
11 daysmeasured replenishment lead timeThat is how long the last 24 deliveries took on average to reach the dock.
64,000 eurostied-up capitalEleven days of replenishment and four days of safety stock cover demand; the remaining 13 days of cover sit on the shelf as stock.
The 20% less excess stock comes from the 180 items that run on four weeks of target cover, even though replenishment lead time and calculated safety stock together cover fifteen days and sales have been stable for eight months.
The 20% reduction in excess stock is this agent's headline figure. The 180 planned items and the eleven-day replenishment lead time represent an ordinary dry goods product group; none of it was measured.