Case: Elcor
Purchasing Manager cuts excess inventory and gains peace of mind
“Today, I can justify the inventory to the entire organization because it’s based on data, not gut feelings.”
– Interview with the Purchasing Manager at Elcor, Kenneth Krogh Jakobsen
Highlights
The challenge
When Elcor came to us, they had an overriding problem:
They had too many items in stock and too much capital tied up in inventory because Elcor’s data was too static, so employees could not react in time to changes in the market. Another practical headache was the manual handling of data in Excel, so Elcor lacked specific methods and tools to analyze the inventory and act on it.
The solution
In addition to an ongoing collaboration with Inact consultants, Elcor chose the Inact Now platform, which makes daily and nightly inventory calculations, automatically intercepts changes in data, and notifies Elcor employees so they can make appropriate adjustments to the inventory before it’s too late.
The result
In addition to better collaboration within the organization and peace of mind for Purchasing Manager Kenneth Krogh Jakobsen, Elcor achieved impressive CFO-friendly results in just 12 months:
The stock value has been reduced by DKK 18 million, the turnover rate has increased by 37%, and Elcor is much quicker to adjust its planning parameters when changes occur in the market.
Excess inventory led to poor sleep and manual work
Without exaggeration, you could easily call Elcor a data-driven organization. Purchasing Manager Kenneth Krogh Jakobsen says that he has skilled analytical colleagues and that it’s standard in the company to use data as a guide rather than a gut feeling.
When we met Elcor, they were already good at working with data and had it served on a silver platter with traditional reports from business intelligence tools. And like many other professional companies, data was processed in Excel.
However, this presented a practical and all-too-familiar problem:
Everyday to-do lists took over, and by the time Kenneth finally had time to dig into the inventory data, it was long since outdated.
Because reports are really good at what they do best: reporting. However, that’s where the party ends.
What was missing was not data or reporting but insights that the company could act on.
“We got excellent reports with data, but the reports didn’t tell us what to do.”
Kenneth Krogh Jakobsen
Purchasing Manager
And with data without execution, Kenneth Krogh Jakobsen experienced several specific problems:
- High stock value, and an uncontrolled increase in inventory levels
- Over 100,000 SKUs were created, but only customer demand for around 10,000 of them
- Always on the back foot with outdated data and formulas in Excel
- Optimal inventory levels and parameters were not adjusted frequently enough
“We used a lot of resources on 'firefighting' to satisfy customers,” says Kenneth Krogh Jakobsen, who was the driving force behind the collaboration with Inact.
In addition, Elcor wanted to better adjust their MOQ, where they previously had an MOQ of 10 pieces to get a better price, which is good when an item is in demand. However, when the demand on the item became smaller, they didn’t change the MOQ and ended up having five years of supply in stock.
Satisfying both Sales and Finance
In addition to the specific challenges with inventory, Kenneth says he was often in the middle of internal discussions about inventory levels and stock value:
In one corner stood Sales, who wanted to have plenty of items in stock to protect the relationship with customers, and on the other side stood Finance, who were pushing hard to reduce the stock value.
“Can’t we just do it ourselves?”
Kenneth Krogh Jakobsen
Purchasing Manager
In 2022, the collaboration between Elcor and Inact began to cure the inventory headaches. In short, the goal was to:
- Get an analytical overview and specific instructions to reduce inventory
- Make the process of inventory management more intelligent and less manual
- Adjust inventory when the demand on an item changes
“Can’t we just do it ourselves?” was one of the questions Kenneth received from his colleagues who thought they could just develop their own solution. But in addition to the vulnerability and resource-intensive nature of programming their own solution, Elcor would be left with only raw data and no specific instructions. No execution. Again.
Working with inventory just got easier
There’s a world of difference between having a static reporting tool and a dynamic solution like Inact Now. What you can’t see is the team of Inact developers behind Elcor’s solution, constantly developing, maintaining and improving the platform.
Imagine coming in every morning to an updated inventory overview and clear instructions, so you know exactly which levers to pull to have complete control of the inventory. Imagine spending fewer hours on supplier meetings and internal discussions.
Today, this is the reality for Elcor. With Inact, Elcor has close collaboration with Inact’s consultants and automated daily calculations, so Kenneth and his colleagues always have fresh data.
“It’s a user-friendly solution that constantly updates itself and constantly guides us with specific recommendations on what to do,”
Kenneth Krogh Jakobsen
Purchasing Manager
More than just Software-as-a-Service
Before Inact Now, Elcor’s insights into the inventory were based on static data and gut feelings, resulting in a reactive approach, which sometimes left Elcor feeling behind the curve. Working with Inact Now provides Elcor with automated and intelligent insights, allowing the company to stay ahead of the warehouse, and development.
“Now we have an automated solution that constantly monitors our inventory and tells us what to do,”
Kenneth Krogh Jakobsen
Purchasing Manager
However, Inact Now is not just another Software-as-a-Service platform. The collaboration is built on, well, collaboration, where Kenneth uses the Inact consultants as experts and sparring partners.
“It’s much more than Software-as-a-Service. Every time we talk, I get a lot of specific inspiration and feedback because Inact talks to others in the industry every day.”
Kenneth Krogh Jakobsen
Purchasing Manager
Peace of mind and reduced stock value by 18 million DKK
“Inact Now gives us an analytical basis for decisions, and we can immediately see impact analysis calculations, so discussions and meetings are no longer based on gut feelings,”
Kenneth Krogh Jakobsen
Purchasing Manager
From DKK 48 million to 30 million in stock
Now you can safely call the CFO because during the period with Inact, Elcor has created results that really show on the bottom line:
- The turnover rate has increased by 37% in 12 months
- The stock value has been reduced by DKK 18 million in 12 months
- Since the last Business Review with Inact, the stock value has decreased by DKK 5.2 million
Fewer meetings and better collaboration
Previously, Kenneth noticed some skepticism between departments when he reduced inventory levels, and his colleagues in Sales were worried that it would affect delivery times and cause dents in customer satisfaction.
“They feared that we were doing it to optimize our own KPIs rather than thinking about delivery performance and customers,” explains Kenneth Krogh Jakobsen.
After working with Inact, the organization has a common starting point across the value chain.
“There is greater trust and understanding because we can all see the same data. It takes emotions out of the discussions.”
Kenneth Krogh Jakobsen
Purchasing Manager
He highlights three things about Inact Now as particularly positive:
- More execution than traditional business intelligence
- It’s user-friendly for colleagues and easy to deploy across the organization
- Faster to implement than building it yourself in, e.g., Power BI
In addition to results that fit in an Excel sheet, Kenneth Krogh Jakobsen reports better collaboration and peace of mind:
“We’ve gone from many long meetings and manual work to an automated tool that constantly keeps us informed. And I sleep better at night.”
Kenneth Krogh Jakobsen
Purchasing Manager
Kenneth also points out that Inact Now acts as a defense for a frustrated Purchasing Manager who (often) fights an unfair battle to keep everyone happy. With Inact Now, Kenneth uses data as a starting point and can justify inventory to colleagues in both Sales and Finance.
The notifications you don’t want to miss
Finally, we asked Kenneth Krogh Jakobsen what working with Inact has given him, to which he replied:
“A massive bad conscience, because every time we talk, I realize that we can get more out of the system and the collaboration with Inact.” Kenneth continues: “Joking aside, we have an efficient operation and peace of mind about our inventory.”
Kenneth says that Elcor has gone from a reactive approach to the inventory, where they were often on the back foot when it came to adjusting the inventory, to being at the forefront today because Inact Now automatically notifies them of changes – before it’s too late
About the case
In this case, you will meet Kenneth Krogh Jakobsen, Purchasing Manager at Elcor in Southern Jutland. With factories in Denmark and Poland, the company offers complete solutions within electrical panels and related services, as well as a components division focusing on energy-efficient transmission solutions.
About Elcor
Eegholm is now part of Elcor. They have more than 200 employees in three factories in Denmark and Poland. The company offers complete solutions within switchboards and related services and also has a components division focusing on energy-efficient transmission solutions.
Lasse Berg
Chief Commercial Officer
lb@inact.io
+45 20670690