HVAC Supply Chain Improvement

Client Issue

A leading HVAC manufacturer had declining profit in its light commercial product line. With 100 SKUs and seasonal demand, its perceived options included either immense inventory spread throughout the U.S., or significant lost sales. With high margins, neither alternative was ideal. Simultaneously, shareholders expected significant bottom-line growth.

Project Approach

  • Developed and evaluated options to satisfy the demand for “100 SKUs” without exploding field inventory
  • Worked with design engineers to identify design options that drove SKU proliferation
  • Built optimization model to maximize company profit
    • Focused on total process, not just operations
    • Client was previously focused on cost minimization, not profitability

Client Results

Changed client perspective from minimizing supply chain costs to using supply chain changes to drive corporate strategy/profitability.  Changed model from distributing finished products to one that focused on five primary SKUs with field customization to cover 97% of customer needs. Client developed relationships with contractors in local markets to add final product customization.  Reduced inventory by 80%. Profits increased 60%.

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