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SUCCESS STORY | FIXING INVENTORY

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A privately held manufacturing business was

having cash flow challenges made worse by:

• Soft sales and rising inventory levels

• Purchasing driven by outdated sales plan

• Excessive slow moving & obsolete inventory

• Running out of warehouse space

• Frequent need to expedite material in

• “Economic Order Quantities” sitting on the

shelf for months, and in some cases, years

• Outdated processes that are holding the

business back

The Symptoms:

This manufacturer ran out of cash while

orders softened and inventory piled up.

The Solutions:

Leveraging a combination of Rapid Discovery and

Business Process Improvement, The M. Ryan Group

tailored the solution across People, Process and

Systems to achieve results by:

People: Opening dialogue with vendors to taper

purchases while strengthening relationships

Process: Implementing a process to dispose of slow

moving/obsolete inventory in addition to creating a

formal communication process to link Sales,

Operations, and Finance

Systems: Procurement leveraging existing ERP

system to avoid buying unneeded inventory

The Result: Inventory reduced 41%,

improving cash flow by $7 million.

“Mike Ryan understands the importance of

generating positive cash flow. He quickly

reduced inventory levels, drastically improved

inventory turns and most importantly improved

the company's cash position in a very short

period of time.”

Scott Johnston, CFO

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PROCESS | RAPID DISCOVERY

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Rapid Discovery Process:

Rapid Discovery is a “Best Practice

Review & Diagnostic” of your inventory.

The Deliverables:

People: Quantify issues across the organization

creating inventory challenges, and the potential

impact of inaction

Process: Determine if inventory processes are

definable, predictable, and repeatable

• External benchmarking of inventory turns

• High level inventory turns analysis

• Inventory balance analysis of raw materials,

work in process, and finished goods

• Rapid action measures (“Just Do It”)

Systems: Identify if existing technology solutions

are being fully utilized

• Work within existing software systems vs.

inconsistent ad hoc spreadsheets

Conversations with Leadership

Process Performance (Metrics)

Inventory Performance (Data)

Needs / Gaps / Opportunities

Business Impact

The Solution: A tailor made roadmap for your business to

improve cash flow, increase inventory turns,

and create customer satisfaction.

Inventory TurnsAutomotive Parts

Suppliers

Client

4.4

Industry Avg.

8.6

Maximum

15.5

Minimum

2.6

Increasing Turns to Industry Average is Worth ~$7.5 Million in Cash Flow

RAW, 90.3%

WIP, 1.4%

FG, 8.2%

Inventory Balance

• Inventory Balance Analysis: Large opportunity to reduce Raw Material inventory levels

Raw Materials disproportionately high compared to Work in Process and Finished Goods

Root cause of imbalance identified; material not allocated to work orders in a timely manner

• Rapid Action Measures “Just Do It” utilizing current resources and existing team

Review open purchase orders with delivery dates > 30 days in the future

Initiate conversations with vendors to taper procurement on open purchase orders

Identify and action open issues with functional leadership (Plant Manager, Procurement Manager, Warehouse

Manager, Sales Manager, Controller) to create a collaborative solution

Contact customers with current backorders and provide updated ship dates

Systems: Current planning software has the functionality to set min/max levels and purchasing triggers, however

existing processes prevent the system from being fully utilized.

Allocate material to work orders at time material is removed from the warehouse

Shifting material from RAW to WIP will eliminate the awkward practice of calculating “net inventory” and provide

clarity on true purchasing demands

Actionable opportunities exist to improve cash flow through increased inventory turns. Details on the value

of the opportunity and solutions tailor made for your business are within the full Rapid Discovery report.

SAMPLE | RAPID DISCOVERY EXECUTIVE SUMMARY

People: Leadership has high engagement and the desire to win. Opportunities exist to improve alignment across

functions. Competing metrics identified as a source of conflict.

• Communication between functions does not occur on a regular basis - Handoffs vs. Teamwork

• Purchasing operates tactically without longer term (> 30 day) visibility

• No one person or function has ownership for inventory performance

Process: Overall, while there are some standardized reporting processes (Monthly Operating Review), the

underlying processes themselves consist mainly of “institutional knowledge” and are not easily transferrable to

others across the business.

• External Benchmarking of Inventory Turns:

Current inventory turns of 4.4 are below the average for similar businesses in your industry

Improving inventory turns from 4.4 to 5.4 will provide ~$2.9 Million of additional cash flow

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LEADERSHIP BIO | MICHAEL RYAN

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Helping you achieve profit &

performance goals in your business.

Areas of Expertise:

(330) 283-7234 WWW.MRYANGROUP.COM

With more than 20 years of experience in

building cross-functional, high-performance

teams, Michael has broad-based experience in

leading collaboration, connecting the dots

across a business by speaking the language of

sales, operations and finance.

He is a “roll up the sleeves leader” with the

demonstrated ability to analyze a problem, articulate the

challenges, explain the improvement strategy and motivate a

team. Michael delivers results through a combination of

Business Process Improvement and Lean Six Sigma.

Prior to founding the M. Ryan Group, Michael was the VP of

Operations at Hines Specialty Vehicle Group, a privately held

business which manufactures custom, on/off highway heavy-

duty vehicles. In this role, he reduced the breakeven revenue

point by 15%, increased productivity by 34%, and reduced the

order to delivery cycle time.

Prior to Hines, Michael worked with Carlisle Brake & Friction,

Goodyear Tire & Rubber Company, and General Electric in

leadership roles of increasing responsibility.

Michael holds a BS and MS in Ceramic Engineering with an MBA

concentration from Alfred University.

He is a GE trained & certified Six Sigma Black Belt.

Corporate History:

• Inventory Management

• Working Capital Improvement

• Supply Chain Management

• Manufacturing Operations

• Strategic Planning

• External Customer Focus