Kennametal?Saves Millions of Dollars by Redesigning Inventory Management Processes

The Client

Kennametal?is the market leader in North America in metal cutting tools and is second in Europe and worldwide. It is the undisputed global market leader in tools for the mining and highway construction industries. Kennametal markets its products under several highly respected, widely recognized brand names, including Kennametal, Kennametal Hertel, Hertel, R?ig, Cleveland Twist Drill, Greenfield, Hanita, Circle Machine, Vermont Tap & Die, Disston, Blu-Mol, RTW, Carbidie and Adaptive Technologies.

The Challenge

Kennametal?prides itself on its go-to-market strategies of maximizing availability of custom and standard products and providing exceptional customer service. But these dual strategies present challenges, including high inventory storage costs and obsolete inventory write-offs. Kennametal struggled with inefficient and inaccurate forecasting and demand capabilities, which created product shortages and lost sales, bloated inventories of under-demanded products, and increased shipping and overtime costs

The Solution

BearingPoint and others within Kennametal collaborated on an extensive review of the company's entire manufacturing-to-delivery process, closely examining areas such as customer order entry procedures, customer relationship management, manufacturing lead times, inventory management, replenishment policies, product life-cycle management, and customer service. With manufacturing plants and distribution centers located throughout North America, Europe, and Asia Pacific, the Latrobe, PA based company ultimately wanted to improve its materials management processes and refine its Manugistics based forecasting and supply planning system based on these new processes. In just nine months, BearingPoint helped Kennametal redesign key inventory management processes and re-implement its Manugistics?Demand Planning module to fully leverage its technology investment.

The Benefits

As a result, Kennametal improved inventory cycle turns for finished goods by one complete turn, reducing inventory investment by approximately $17 million.