Rebuilding Inventory DNA at a Tier 1 Automotive Supplier

A Tier 1 automotive supplier entered the early 2020s carrying inventories well above operational requirements. Three years of steady accumulation across raw materials, work-in-process, finished goods, and MRO had produced a structural balance-sheet drag, with no group-level mechanism to reverse it. Inventories had grown to several billion Euro tying up cash that the business needed to de-leverage.

A benchmark analysis made the exposure concrete: 37 days of inventory held against a Top 10 peer average of 29 — an eight-day gap translating to hundreds of millions in trapped working capital.

The data landscape made the problem unmanageable. Nine ERP systems operate independently across divisions. Goods-in-transit carried no harmonized visibility. Disposition parameters had never been audited at group level and varied widely. There was no single number anyone could point to and trust.

Accountability was equally fragmented. Inventory management sat across functions with no formal end-to-end ownership, no common KPI framework, and no structured target-setting process. Divisions set their own norms. Corporate had limited sight of what was realistic and what was not.

The program was designed from the outset as a full operating model transformation. Immediate lever activation and long-term infrastructure were treated as inseparable: unlocking the €500M first-year target required data and governance systems that would continue generating returns after the program closed.

Top-down lever sizing came first. Structured workshops with all divisions quantified structural reduction potential by inventory category, drawing on external benchmarks and internal data to set credible targets. Findings were handed directly to divisional SCM leads with clear accountability along five pillars:

• A standardized reduction methodology deployed across 200 manufacturing units. A global expert trainer group was built in parallel, so the approach would continue generating returns without a central program team.
• Bi-weekly coordination sessions between Commodity Purchasing and divisional teams converted supplier relationships from ownership-on-delivery to consignment, enabled by clear ownership, defined interfaces, and centralized performance tracking.
• Short-term lever deployment across all divisions, spare-parts standardization via Spartech to enable cross-location sharing, and design of a mid-term multi-site warehouse concept - running simultaneously.
• Built new, integrating all nine ERP systems to give plant managers daily visibility against targets for the first time. The data foundation for future AI-driven anomaly detection and forecasting. Value stream analysis added two further waves of cross-plant optimization, delivering 5-8% inventory reduction per stream.
• A driver-based target-setting approach piloted across 20+ plants and stress-tested across multiple planning cycles, replacing subjective divisional commitments with analytically grounded baselines. Embedded into the OP planning process before the program closed.

Organization design completed the picture: 18 end-to-end process changes documented, inventory-related task responsibilities defined at role level, a new SCM organizational blueprint with job role cards submitted for implementation, and 15 global Supply Chain Academy training modules launched in under six months.

€500M in reduction measures were identified and secured in year one, effectively the full program target.

Value stream analysis was scaling into the second year with further potential locked in divisional plans. Localization was the one lever that materially underperformed, as economically viable opportunities proved narrower than the benchmark suggested.

Around €500M of identified potential was carried forward into the next two years' operating plans with named owners, milestone tracking, and divisional accountability - making the long-term pipeline approximately €1B.

Sustainability was built in. With 85% of group inventory on the Inventory Management Platform by year-end, the organization had lived daily visibility it had never had before. An AI and advanced analytics roadmap were designed and approved. A trained global expert facilitator group and 15 Supply Chain Academy modules enabled an effective transition into the line organization.