Ochoa Lacar modernises its approach to inventory management with Slimstock

Ochoa Lacar Hermanos is a leading distributor of iron, sanitary, heating and plumbing products. To overcome the complexities of inventory management, the company decided in 2005 to implement Slimstock’s Slim4 solution the cornerstone of its supply chain.

Since 1894, Ochoa Lacar has set the benchmark for the distribution of materials in Spain. Initially, the business focused on the distribution of iron and coal. However, in more recent times the business has diversified into sanitary material, heating and plumbing.

With the demands of the new markets, Ochoa Lacar faces increased competitiveness as well as a much larger range of products to manage. Given the high cost of handling iron and its derivatives combined and the rising cost of other raw materials, the business needed to strengthen its supply chain. Ultimately, the business could no longer rely on the min/ max functionality within their Navision ERP system.

Bernardo Turrilas, Chief Financial Officer at Ochoa Lacar explains: “We became increasingly aware that our min/max system was no longer sufficient. The existing system could only be applied to products with a long history of stable demand. However, these types of articles represent only a small part of the 18,000 articles that make up our assortment. This way of working generates high inventory levels and a poor level of service.”

“When we were introduced to the Slimstock’s Slim4 solutions, we were impressed by the tool’s capability to build robust forecasts for all of our products; regardless of whether they had regular, regular, slow or seasonal demand patterns. We were also impressed by how easily Slim4 would integrate with our Navision ERP solution,” adds Bernardo Turrilas.

Reduced stock-outs

“Previously, Ochoa Lacar made planned inventory by reviewing the warehouse shelves and filling gaps. Because our Min/Max system was static not updated regularly, we suffered lots of stock-outs as well as high levels of excess. This was exacerbated by the fact we had to invest in safety stock.

Slimstock helped us to reflect on many aspects that we did not delve into before. For example, how we determined the service level. It was clear that we had more of everything than what we needed. Although we provided our customers with good service, we couldn’t determine the exact level of service we were offering.

Now, we can say for certain that our service level stands at 97%. Furthermore, we have attained this improvement with 16% less stock; a huge cost saving for our business. Given that holding costs equal around 15%, as a financier, I am not at all interested in holding obsolete stock in the warehouse. Slim4 has given us this visibility,” states Turrilas.

Strategic insight

The CEO concludes: “Today we can make more strategic decisions about suppliers, sales channels and product categories. Slimstock also offered us a money-back guarantee on the project in case we were not satisfied. But if ask me if would like to return to the old way of working; the answer would be never!”