Inventory Optimization for Loss Reduction and Cost Efficiency

The Business & The Challenge

A leading food &beverage manufacturer with 40+ U.S. plants was experiencing significant value erosion due to:

• Excessive inventory losses tied to rework, damages, and liquidation
• Lack of structured methodology to map, quantify, and manage losses
• No integrated governance to track improvements or accountability

The core challenge:

➡️ Reduce COGS (Cost of Goods Sold) by identifying supply chain inefficiencies, improving inventory practices, and institutionalizing results tracking.

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Approach Details

Falconi applied a proven Expense/Cost Reduction methodology with structured phases for operational transparency and targeted savings.

Strategic Phases:

1. Pre-Work & Baseline Setup
   
    
   • Defined key deliverables and created improvement teams
 
2. Opportunity Identification
   
    
   • Pinpointed losses due to idleness, overproduction, and contractual inefficiencies
 
3. Validation & Execution Structuring
   
    
   • Structured optimization plans and assigned clear accountability
 
4. Governance and Incentivization
   
    
   • Embedded dual ownership and incentive mechanisms for responsible manage

Methodology leveraged deep cost-to-need mapping and performance tracking.

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Results Achieved

Key Metrics                                                        Outcome

Baseline Scope                                                 USD 204M

Opportunities Identified                               USD 70M (34% of COGS)

Savings Captured                                            USD 41M (20% of COGS)

New Operating Baseline                               USD 163M

Inventory Management  Contribution    USD 21.5M of captured value

# of Savings Plans  Developed                   25 total

Example Plan                                                      $7.9M in savings from 1  plan alone

Example from a single initiative:

• Increased liquidation cost recovery from 39.8% to 44.2% over six months
• Raised case sale productivity with sustained improvements

Why It Worked

• Falconi delivered a repeatable loss mapping framework
• Plans linked to measurable cost recovery KPIs
• Introduced clear tracking governance and accountability layers
• Created culture of value capture and operational discipline in inventory control

Conclusion

This project showcases how Falconi enabled a multi-site manufacturer to save $41 million through supply chain and inventory optimization. By addressing warehouse losses, rework inefficiencies, and poor liquidation visibility, Falconi helped the client embed a smarter and leaner cost culture.

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