Ashley Furniture is the third largest home furniture manufacturing company providing case goods, mattresses, upholstered goods and home accessories that are sold by more than 6,000 retail partners.
Customer expectations to get what they want, when they want it, have never been higher – and that extends to the furniture industry. To fuel continued growth, Ashley Furniture needed to increase its already high customer service levels by ensuring rapid delivery of perfect orders – complete and defect-free.
However, reaching the new goal with the existing planning model would require increasing safety stock levels, thereby driving up inventory, storage and transportation costs. Ashley Furniture knew it needed a more efficient way to optimize its inventory across its entire supply chain network.
Ensuring profitable growth
Ashley Furniture needed to increase customer service levels by ensuring perfect order delivery.
Overcoming industry obstacles
Fluctuating demand and supply uncertainty required more precise inventory rules.
Managing planning models
Ashley Furniture needed to manage safety stock without driving up cost.
Ashley Furniture – The Business Case for Inventory Optimization
Ashley Furniture has used the Logility digital supply chain platform since 1998 to manage its strategic business initiatives involving demand, inventory and replenishment planning. Turning to Logility for inventory optimization was a natural extension to help achieve its new customer service and inventory goals.
In addition to fluctuating customer demand patterns, supply uncertainty needed to be taken into consideration when applying more precise inventory rules. For instance, some suppliers manufacture and ship weekly, while others do so monthly and have varied shipping times. In the past, inventory rules were applied uniformly across the supply chain, without consideration for varying SKU patterns by region.
“As our business continued to grow in larger product portfolio and customer locations, the number of inventory rules grew along with the potential for error and became harder to manage,” said Maegan Huber, forecasting and inventory optimization supervisor at Ashley Furniture. “After implementing Logility Inventory Optimization™, we immediately saw a significant reduction in effort to leverage a wide variety of inventory rules.”
Ashley Furniture took an incremental approach to rollout, starting with low-dollar goods such as lamps and picture frames. After all imported items were optimized in Logility Inventory Optimization™, the team moved on to domestically manufactured goods before finishing with upholstery, kits, components and purchased parts.
The new inventory optimization strategy is delivering benefits across Ashley Furniture’s global supply chain network. “With Logility we are right-sizing our inventory,” Huber says. “We’re getting the inventory to the right locations, reducing it where possible and increasing it where needed. We are also seeing some unplanned benefits of finding additional opportunities to reduce forecast error, saving the company money by not buying inventory or transferring it from incorrect locations.”
Ashley Furniture now optimizes inventory at an item level, with rules tailored to a specific item and region. The solution helps analysts have a greater and more efficient impact on business. By instituting a management by exception process, the scenarios with the biggest impact to the business receive the analyst’s attention first.
Logility has supported Ashley Furniture to balance inventory with service level goals. Ashley Furniture has improved customer satisfaction, expanded visibility and planning throughout the global supply chain, reduced safety stock and optimized inventory at the item level. It has activated management by exception so the biggest issues get first attention, and avoided the need for additional distribution center space.