Supply Chain Optimisation - Industrial Components Manufacturer

Executive Summary: Supply Chain Optimisation - Industrial Components Manufacturing
Client: Industrial components manufacturer (WA), ~AUD 15M revenue
Consulting Team: Hunterstone Australia
Engagement Duration: 16 weeks
Key Outcomes: Lead times halved, stock-outs reduced 71%, AUD 210,000 in inventory savings

PROJECT BACKGROUND & CHALLENGE

The client manufactured and distributed industrial components with significant import dependency across key product categories. Average supplier lead times had grown to 14 weeks, stock-out incidents were frequent and increasing, and there was no formal demand planning process in place - purchasing was driven by historical re-order patterns and intuition rather than structured demand signal.

The consequences were felt across the business: production delays from parts unavailability, reactive premium freight costs to expedite urgent orders, excess inventory in slow-moving categories tying up working capital, and customer on-time delivery performance that had fallen to 67%.

HUNTERSTONE SCOPE & APPROACH

Hunterstone conducted a supply chain diagnostic and implemented a structured improvement programme covering: demand planning process design and implementation; safety stock modelling by SKU and category based on lead time and demand variability; dual-source strategy for the 12 highest-risk single-sourced items; supplier performance scorecard system covering lead time, quality and fill rate; purchase order process redesign to enforce lead time–based ordering; and a freight strategy review to reduce premium and emergency freight expenditure.

OUTCOMES & COMMERCIAL IMPACTS

Lead times: average supplier lead time reduced from 14 to 7 weeks across priority categories through dual-sourcing, supplier development and improved purchase order management.

Stock-out incidents: reduced by 71% in the six months following implementation, materially reducing production disruption and emergency freight costs.

Inventory holding costs: AUD 210,000 reduction in annual inventory holding costs through improved demand planning and stock level optimisation - reducing excess slow-moving stock while improving availability of critical items.

Customer delivery performance: on-time delivery to customers improved from 67% to 89% over the 12-month post-engagement period.

Premium freight: emergency and premium freight expenditure reduced by 58%, representing an annualised saving of approximately AUD 95,000.

WHY THIS ENGAGEMENT SUCCEEDED

Root cause focus - the engagement addressed demand planning and supplier governance rather than treating symptoms. Safety stock modelling was built on actual demand and lead time data, not rule-of-thumb assumptions. Dual-sourcing strategy was selective and commercially disciplined — applied only where supply risk justified the added complexity. Supplier scorecards created visibility and accountability that improved performance without adversarial supplier relationships.

SUMMARY

Hunterstone delivered a supply chain transformation that halved lead times, reduced stock-out incidents by 71%, cut inventory holding costs by AUD 210,000 and improved customer on-time delivery from 67% to 89% - demonstrating the measurable commercial value of structured demand planning and supplier governance for Australian manufacturers with import-dependent supply chains.