Widex masters the golden balance between service and inventory levels
“It has become easier to manage our inventory and raise our level of service at the same time”
– Interview with Project Manager at Widex, Stine Skulstad
The motto was: better too much than too less
Why did you decide to invest in Inact?
There were several reasons. We have developed a strategy we call Wave, which is based on three areas: innovation, growth and profitability. The goal of this strategy is to double our business in five years.
So to achieve that, we wanted to optimize the procurement department, but our challenge was that we lacked the direction and governance to execute our strategy. And we needed a more efficient way of working.
And even though we had several different systems, none could support execution and correct decisions. So we became convinced that we would benefit from some clear procedures for making decisions. It was a bit random. For example, if there were delivery problems with electronics, the procedure was to increase the safety stock. It’s better to have too much than too less. Today, we focus on having the right things in stock.
Agreement and common governance principles
How do you use Inact to solve your challenges?
First of all, we have automated our analytics in procurement and created an overview. We got help to define a set of rules based on an ABC matrix. The rules are based on the fact that goods are different, which means that we have developed different concrete actions for each ABC category.
The rules are about how often it should be delivered, whether we should spend time negotiating for it, how much we should focus on it, how often we should check that our delivery times are efficient and other parameters that are relevant to us. So all our purchasing profiles are based on this set of rules. They’re the ones that have really helped our results.
Inventory reduction of 1 million per month
All this work supports the profitability aspect of our Wave strategy. We can feel that we are becoming much more reliable. It’s easier to manage our inventory and at the same time increase our service level.
On our CC items and dead stock, we have reduced the inventory value by DKK 6 million since January. Since we started in January, we have also seen an increase from 50% to 90% in delivery reliability. I believe this is due to our increased focus on this area.
In addition, it has also resulted in a much higher efficiency and increased motivation. The buyers themselves say that this focus gives them a much more efficient workday.
"It has resulted in much higher efficiency and increased motivation."
Common set of rules
Widex struggled with setting an overall direction and lacked efficiency in their daily operation. Based on Inact Now they have created guidelines and rules that help them execute their strategy.
Inventory was reduced by DKK 6 million
Based on their analyses in Inact Now, they have changed the way they handle dead items and CC items. This has enabled them to reduce their inventory by 6 million DKK in only 6 months.
Improved delivery performance
The reduced inventory value hasn’t affected their ability to deliver. On the contrary. In less than a year, Widex has increased their delivery performance from 50% to 90%. Among other things, the common set of rules and structure has helped to ensure this.
Widex is a family-owned company founded in Denmark in 1956. Today, it is one of the world’s largest manufacturers of hearing aids. Widex hearing aids are sold in more than 100 countries around the world, and the company employs over 4,000 people worldwide. www.widex.dk