The home improvement retail sector operates in a dynamic environment shaped by shifting customer preferences, seasonal fluctuations, and a broad product assortment. For large retailers, managing inventory across a widespread supply chain that includes multiple levels of distribution centers and retail stores is a complex task.
Striking the right balance between product availability and cost-efficiency is especially challenging. Retailers must manage a mix of fast-moving items and bulky or high-value products, often with varying demand patterns. Traditional inventory planning methods often struggle to account for the interconnections between different supply chain stages, resulting in stock-outs, excess inventory, and reliance on emergency shipments. As customer expectations around product availability and service levels continue to rise, home improvement retailers are increasingly turning to data-driven inventory planning to improve supply chain performance and maintain a competitive edge.
Problem statement
The client, a leading US-based home improvement retailer, was struggling to manage inventory effectively across a complex supply chain network. The lack of a centralized data repository made it difficult to gain visibility into inventory movement and performance across distribution centers and retail stores.
With each store operating under a continuous review system and ordering fixed quantities, the absence of dynamic safety stock and reorder level optimization led to frequent stock-outs and high reliance on emergency shipments. The client needed a solution that could integrate data from different sources, account for operational constraints like lead times and order frequency, and optimize inventory levels in a scalable, explainable manner to minimize holding costs.
MathCo partnered with the client to design and implement a multi-echelon inventory planning solution tailored to these needs.
Impact
- Stock-outs reduced by about ~15% in the first six months compared to the previous period
- Reduced expediting and emergency shipments by more than 35%
- Saved 15–20% in inventory holding costs, delivering $8–12M in annual supply chain savings
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