CASE ZENITH HYGIENE: Zenith and the art of inventory management
UK’s largest independent manufacturer and supplier of cleaning and hygienic chemicals and ancillary products to institutions and caterers, Zenith Hygiene Group is expanding rapidly with turnover growing by more than 50% in just 4 years. The company needed a future-proof solution to manage its stock better and handle its rapid expansion while providing a solid platform that delivers greater efficiency, visibility and control and which can support its business development.
The company had an existing accounting system but was relying on pencil, paper and memory for replenishment. As it grew, staff began to struggle and orders weren’t always properly analysed. A move to spreadsheets helped but didn’t resolve the problem.
Zenith recognised it needed a better solution capable of handling rapid growth while meeting its obligations to customers and suppliers alike. It wanted to reduce inventory and balance stock better across its depots.
Zenith wanted to meet its guarantee to deliver customers their complete order the next day more consistently; ‘On-Time-In-Full’ (OTIF). Any out-of-stock items are delivered immediately as they come in. Stock-outs therefore cost both time and money.
Space was also a big consideration. Some key lines take up a huge amount of room, so moving closer to a just-in-time stocking situation would allow Zenith to free up limited warehouse capacity for other products.
Zenith at a Glance
UK’s largest independent manufacturer and supplier of cleaning and hygienic chemicals and ancillary products to institutions and caterers
- Turnover £50M (2013/4)
- Distribution Centers 5 with a 6th planned
- Manufacturing plant in Northern Ireland
Bakhtiar Hanan, Group Purchasing Director, Zenith, says seasonal forecasting was also hard. “Schools are a very good example of the forecasting problems we face. Our old system would use low summer-holiday period sales figures as a guide for what we were going to sell in September. But come September big orders would come in and we wouldn’t have the stock.”
“The result was that we now have a far greater degree of visibility and control over our supply chain.”
– Bakhtiar Hanan, Group Purchasing Director, Zenith
“We are quite a complex business,” says Simon Bower, COO from Zenith. “We needed something flexible that could develop as we did and out-of-the-box-solutions didn’t offer that.” Zenith evaluated eight solutions and chose RELEX, having seen first-hand the success enjoyed by its existing customers.
Zenith began consultation work with RELEX in September 2014 and the system went live in March 2015.
“Any system is only as good as the input data,” says Tommi Ylinen, MD of RELEX UK & Ireland. “We advised Zenith that cleaning and ordering their historic data were key to providing a firm foundation for the new solution.” It took three months to organise existing sales figures, get suppliers to re-submit ordering rules and to add the team’s knowledge to the system. “It was definitely the most difficult part,” Hanan says.
Specification was left loose because, as Bower says; “We wanted RELEX’s guidance, expertise and insights into how similar businesses handle challenges like ours.” That insight came into play in improving forecasting for new customers. Typically first orders were far larger than subsequent ones, which could lead to overstocking. RELEX solved this by tagging these as ‘opening orders’ and cleansing them from the data used for subsequent forecasts.
The actual integration with Zenith’s accounting system began in January 2015 and took just days. By February Zenith had moved its 30 most important suppliers, accounting for 80% of its business, onto the system, adding the ‘tail end’ by late March.
“Colleagues asked ‘what does it mean for me?’” says Hanan “It’s when they saw it working that they got really motivated.” The Zenith team leaves routine reordering to the system, which does in minutes what used to take a day. It has upskilled to focus on supplier and customer relationships, expediting, deferring and pre-empting issues before they arise.
“We are quite a complex business. We needed something flexible that could develop as we develop and out of the box solutions didn’t offer that.”
regularity on core items’ OTIF deliveries
reduction in inventory reserve
”The result was that we now have a far greater degree of visibility and control over our supply chain,” says Hanan. Zenith has achieved high availability to meet both its OTIF promise and customer expectations. Inventory across all its ranges has been cut from 49 to 44 stock days and is set to fall further.
Replenishment workload has been cut hugely and the team is focusing on optimising service and relationships with both customers and suppliers, many of whom have also benefitted from sharing more accurate forecast data and added visibility.
Zenith now has the platform it needs to handle rapid business growth delivering greater efficiency, visibility and control. “Many large, potential clients want to know we can handle the volumes they need,” says Bower. “RELEX gives us a firm foundation that we can build on so we can say ‘yes’ to them with confidence.”
The goal is also to automate routines and labour-intensive tasks and make processes more efficient.
One SKU, 10% of Turnover
A good example of an issue that needed both RELEX’s expertise and technology concerned blue paper rolls. This one SKU is key to Zenith’s business but is also bulky, and takes up a lot of warehouse space in proportion to its value.
The product needed to be managed separately and was therefore segregated out of normal forecasting. “This particular line required a lot of optimisation through parameter and rule refinement,” says Zenith’s Hanan.
The solution was to schedule more frequent but smaller deliveries on a ‘just-in-time’ model in order to maximise availability, while minimising inventory levels and storage costs.