The Hendrik Veder Group (HVG), based in Rotterdam, produces heavy duty cables that are used in the maritime and offshore market. In addition, the company has a wholesale department that supplies greenhouse builders and production companies. HVG got in touch with Kwattaas to optimize its stock levels. The result was substantial economization and a higher level of service towards clients.

The question: reduce stock levels

The company noticed that it had an unnecessary high amount of stock that took up too much working capital position. Furthermore, it became clear that there was no logical differentiation in the stock amount; fast-moving products sometimes went out of stock, whereas there was a high amount of long-term stock of slow-moving products. Additionally, the company aimed to have a more structured cooperation with itssuppliers. Finally, the company wanted to improve the communication between the purchase, sales and finance departments in order to work in a more decisive manner. Ben Brinkers from Kwattaas was asked to be interim supply chain manager and tackle these issues. The three issues turned out to be strongly interlinked.

1. Stock levels

First, it was necessary to gain insight into the different types of products and the corresponding stock levels. Up until that moment purchases were primarily based on clients’ requests in the sales department, which weren’t substantiated by any data. Together with the people from the organization, and based on actual sales data, Ben made a categorization in products, according to turn-over rate:

• category A are the fast-moving products that should always be in stock;
• category B can potentially and temporarily run out of stock;
• category C products are only ordered on request by clients.

Afterwards, they determined the right amount of stock required for each product category and the specific moments additional stock needs to be ordered for each category. Taking into consideration that there should be a stock level of four months, including two months of safety stock. This way, there’s always an optimal and reliable level of stock.

2. Supplier management

More efficient purchasing correlated with the desire to build better relations with suppliers. Purchasing was irregular, as sometimes it required emergency orders, and there was no standard term for payments. This combination of factors put pressure on the relationship with suppliers. The company selected a number of preferred suppliers and made clear agreements with them. This led to more reliable deliveries and clarity on both sides.

3. Internal communication

Prior to the changes introduced by Kwattaas, there was a lot of unstructured communication between the different departments. This created unrest in the purchasing and payment process. Orders transferred to purchasing by the sales department weren’t coordinated cohesively, and some payments were given priority based on individual agreements, without there being a rational basis. The company knew that a structured discourse and coordination of activities is essential for healthy operations and asked Ben, as supply chain manager, to structure this as well.

Clear descriptions of tasks and responsibilities were introduced in the supply chain management department, as well as weekly meetings. On the operational level, purchasing now consults with operations and sales, using the ABC-categorization, stock levels, and the corresponding ordering moments. On the management level there’s a weekly meeting between the managers of purchasing and finance.

The result: a clear way of working and significant economization

Ben worked full-time for the organization for nine months as of late 2018. Afterwards, he remained there for another couple of months on a part-time basis. In early 2020 he departed, leaving the company with an excellent basis for further growth. The rationing of stock levels resulted in a great economization. It also led to a higher supply reliability: fast-moving products no longer go out of stock, and unexpected large orders can be delivered without any problems. Relations with suppliers have improved and the employees of Hendrik Veder now have the tools and structure to cooperate more efficiently.

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