Managing inbound inventory in a complex portfolio environment A two-echelon warehousing strategy based on root cause analysis

Sammanfattning

As manufacturing companies grow and supply chains become increasingly morecomplex. This creates greater demand on warehouse operations in inventorymanagement, storage capacity, and material availability. These challenges areexamined through a case company that has experienced rapid growth in recent years.For the case company this has led to a more complex product portfolio and createdchallenges related to inventory accumulation, obsolete materials, and warehousecongestion. The case company currently operates with both an internal and externalwarehouse, but with no clear structure for storage allocation and the replenishmentsbetween the two locations. The purpose of this thesis was therefore to identify the rootcauses behind the current situation and propose a differentiated two-echelonwarehousing strategy.The study was conducted as a single case study and by using a mixed methodapproach by combining interviews, observations, ERP data, and internal reports. Theroot cause analysis methods were used to identify the underlying causes, whileABC/XYZ classification, safety stock calculations, and replenishment analysisformed the basis for the proposed strategy.The findings showed that the main causes are inaccurate demand information,unstable production planning, uniform safety stock policies, and poor coordinationbetween the warehouses. Based on these findings, a differentiated two-echelonwarehousing strategy is proposed. The strategy introduces storage allocation criteriaand replenishment rules adapted to different material categories. High-frequencymaterials are stored internally with calculated safety stock, while intermittentmaterials are primarily stored externally and replenished to the internal warehouseagainst a confirmed production order. The proposed strategy reduces warehousecongestion, free up pallet positions, and creates a more structured replenishmentprocess.