Please refer to the step 3 at the end of the press release (PR), where it reads “... an ongoing review process, managed either inside or outside the company, to keep inventory targets aligned with changing conditions and ensure a sustainable results over time.” If the focus is more about growth and profitability than on working capital management, the goals and the targets are adjusted accordingly. This can be achieved either by an outside service or an internal system.
The 10-30 percent expected inventory reduction is based on our experience in more than 190 implementations at more than 150 customers. The technology is not new, only the implementation approach. This has been our bread-and-butter business for more than 10 years.
First, let me reiterate that pricing starts at $30,000 for the initial rightsizing and depends on the complexity and size of the operation.
Let's do the math for a medium size business with $500 million in annual sales and $40 million in inventory. Let's also say that we feel quite confident that we can quickly help this company achieve at least a minimum 10 percent reduction in inventory in a few months time. That equates to a $4 million reduction in working capital, which generates equivalent debt reduction or increased cash.
In addition there would likely be other efficiencies and cost savings associated with less inventory, such as less storage, handling, and carrying cost, and less inventory obsolescence. Finally, we believe that many companies will continue to work with us, and will achieve even further savings, but we won’t know what that total potential value proposition looks like until we get in and do the first analysis.