For Original Equipment Manufacturers, inventory management is a matter of great importance. It is their master lever to unlock streamlined operations, cost savings and demand in the national and international markets. But what are the relevant elements that help in actionable strategies? Here are a few mentioned with global examples on execution.
Predicting the Unpredictable: Smarter Demand Forecasting
Gone are the days of relying on gut feelings or outdated spreadsheets. Today’s OEMs use predictive analytics to anticipate market shifts with startling accuracy. A great example would be what Dell Technologies does. They do their analysis in real time on customer data and macroeconomic trends. By doing so, they managed to reduce excess component inventory by 30% while maintaining near-perfect delivery rates. What they used was ML models that adjust procurement plans hourly, not monthly.
Siemens takes this further with digital twins, virtual replicas of production lines that simulate demand scenarios. When the company noticed a surge in orders for industrial automation parts, these simulations allowed them to recalibrate inventory without overstocking. The result? A 20% drop in obsolete stock.
JIT Isn’t Dead—It’s Evolving
Toyota introduced the Just-In-Time or JIT system back in the 1970s and its modern version is still saving the company billions of dollars every year. However, the 2011 Thailand floods exposed its supply vulnerability when the company’s suppliers were underwater, halting production for weeks. Bosch follows a hybrid model where it keeps a safety stock in place, this ensured their European assembly lines stayed active even when their suppliers in Malaysia faced lockdowns due to the pandemic.
Safety Stock: The two-ended sword of dilemma
Too much safety stock strangles cash flow; too little risks shutdowns. Ford’s response to the 2020 chip shortage shows how to strike a balance. Using AI tools that recalculate safety stock needs daily, the automaker reduced capital tied up in buffer inventory by 15%—even as rivals idled plants.
Contrast this with Samsung’s 2018 misstep. Underestimating demand for OLED screens left the company scrambling to fulfill iPhone orders, costing $300 million in lost sales. The takeaway? Static safety stock formulas fail. Dynamic, data-driven models win.
Suppliers are Partners, Not Vendors
Apple’s iPhone 5 production delays in 2012 led Apple to learn a lesson on over-reliance. With its collaboration now with Pegatron and Luxshare, Apple’s suppliers let them monitor Apple’s inventory in real time. This ensured that lead time was cut by 25% and Aplle’s suppliers became collaborators rather than vendors.
Walmart and P&G went a level beyond by doing something called Vendor-Managed Inventory (VMI).
By letting P&G track Walmart’s shelf-level stock data, the retailer reduced out-of-stock incidents by 10%—a win-win that boosted sales for both companies.
Lean Isn’t Just for Factories
Caterpillar’s lean journey began with a simple question: Why store months’ worth of hydraulic components when customers order weekly? By mapping every step from raw material to delivery, the company identified $2 billion in waste over a decade. Their factories now run with 40% less buffer stock, proving lean principles apply as much to warehouses as assembly lines.
John Deere’s story echoes this. By redesigning workflows at its Iowa plant, the company reduced raw material waste by 22%, a figure highlighted in its latest sustainability report.
Tech’s Double-Edged Sword
While AI integrations in large-scale businesses have definately made life easier, it is not without complications and errors. Amazon warehouses have over 500,000 robots that sort, fetch & pack items, ensuring seamless transfers of products to customers. However, a software glitch in 2023 led to a series of malfunctions and robots collided into shelves and each other. This led to the need to ensure smarter fail-safe and rollback options.
EOQ in the Real World
Procter & Gamble’s diaper division shows Economic Order Quantity (EOQ) done right. By integrating data on global demands, shipping costs & the possible need for backup stocks, P&G optimized P&G optimized batch sizes, saving $500 million annually.
But EOQ has pitfalls. Tesla’s 2018 battery component overorder—a $150 million mistake—reveals what happens when models ignore demand reality.
Location, Location, Location
Fashion major Zara has has cracked the code in supply chain management. With 85% of all production close to its Spanish HQ, it is able to get products from sketch to store in a matter of just 15 days. This ensures Zara has a 30% less inventory while still staying relevant in comparison to competition.
On the other hand, H&M used a decentralized network which left the company with $4.3 billion in unsold clothes in 2018.
Inventory Forecasting- How Sankey is helping in the Revolution
Effective supply chain management in commercial vehicle (CV) manufacturing plants hinges on accurate demand forecasting. However, disparate data sources and the lack of integrated forecasting models often lead to spare-part overstocking, shortages, and inventory imbalances.
To address this, Sankey Solutions has developed a data-driven demand forecasting system. The solution begins by integrating historical consumption and production data from APIs, SAP systems, and BOM records. This data undergoes cleaning, transformation, and exploratory analysis before being stored on AWS S3 for secure access.
Machine learning models are developed using MLflow, allowing rigorous training, evaluation, and reproducibility. Once trained, models are containerized via Docker and deployed as API-based services, enabling seamless integration with enterprise applications.
The system outputs granular, day-wise part demand forecasts. These predictions empower planners to make data-informed decisions, optimizing inventory levels and ensuring uninterrupted production flow across multiple plant locations.
The Path Forward
From Toyota’s JIT evolution to Amazon’s robot armies, successful OEMs treat inventory as a living system, not a static asset.
AI is now easily accessible and can use calable tools to cut costs, spur innovation, and streamline operations without having to make significant infrastructure investments. Sankey Solutions provides customised AI solutions that meet the demands of contemporary automakers, ranging from digital manufacturing cockpits to predictive maintenance. Our data-driven, real-time insights assist companies in making better decisions, maximising efficiency, and maintaining a competitive edge in a rapidly evolving mobility landscape.
We believe in embracing tools like predictive analytics but temper them with human judgment. We must work on building supplier ecosystems, not transactional relationships. Recognizing that today’s perfect formula becomes tomorrow’s liability in our era of constant disruption.’
Is there a switch in our brains that makes us trust others? And what determines when this does – or does not – happen?
In today’s fast-paced and competitive business environment, trust is a key factor that can make or break a company’s success. Trust is more than a term; it is a feeling. It is the foundation upon which successful organizations and relationships are built. Neuroscience research has shown that trust is not just a psychological construct but is also rooted in our brain’s neural circuitry.
But why focus on trust in the first place?
Companies are twisting themselves into knots to empower and challenge their employees to create a state of high engagement. According to Gallup’s Meta-analysis, high engagement is defined largely as having a strong connection with one’s work and colleagues, feeling like a real contributor, and enjoying ample chances to learn. These have a positive effect on the business as well as the employees, however, one cannot buy higher job satisfaction and engagement.
So, what creates a difference? The answer is to build a culture of trust. You can think of trust as a leading indicator for performance: when employees feel trusted, they give more effort and are more innovative, leading to higher profits. Plus, they experience less chronic stress and are happier with their lives, and these factors fuel stronger performance.
Breakthrough Research on Trust at Work
A global study of over 1600 employees and managers has found that trust is highly correlated with employee satisfaction and productivity. Research showed that employees at high-trust companies were…
- 40% less likely to experience burnout.
- 50% more productive
- 106% more energized at work (Paul J. Zak, 2017)
These are powerful findings and prompt the question, how can we inculcate trust among employees? To understand employees better, it is essential to gain insight into the workings of their minds. This can be achieved by delving deeper into the general working of the human brain.
So, let us understand what runs in our brains –
We are mammals, so we have all these amazing and automatic things that happen in our brains and bodies when we engage or interact with our surroundings. Trust is, therefore, synonymous with connection and distrust is synonymous with disconnection. And why this is so heavy because as humans, for us to survive we have to feel that we are a part of something like we belong to and that we have a community.
Neuroscience has shown that trust is mediated by the release of the hormone “oxytocin” in the brain. Oxytocin acts as a chemical messenger, and it helps us decide at a practical level whether it is ‘safe to approach’ or not, so from an evolutionary perspective, humans are unique.
To simplify, let’s take an example of how it affects work -
Say you are working in a team and your team member treats you nicely, this means there is a positive social interaction, which causes the brain to produce oxytocin. Collectively, if there is a culture where employees are constantly causing the release of oxytocin in each other’s brains then we get all its benefits such as reduced physiological stress and increased empathy and performance.
Conclusion
In conclusion, the benefits of oxytocin cannot be overstated, and understanding how to increase the release of oxytocin and build a culture of trust is crucial for organizations that seek to enhance their performance and create a positive workplace environment.
In the next part of this series, we will explore ways to increase the release of oxytocin and provide some real-life examples of how Sankey Solutions have implemented these strategies to develop trust in their employees. So, stay tuned to learn more about how you can harness the power of oxytocin to create a culture of trust.
– by Mansi Chopda
Welcome back, Trust seekers!
In our previous blog, we explored the fascinating science behind trust and its connection to oxytocin. Recap and read the full blog here.
Today, we take our understanding a step further as we uncover the secrets of the “Trust hormone” by revealing ways to boost oxytocin and unveil real-life examples of how Sankey Solutions has successfully implemented these strategies to foster trust among its employees. Get ready to harness the power of oxytocin like never before!
How to Build Trust?
Paul J. Zack an American Neuro economist, discovered 8 trust-building ways in his book “Trust Factor: The science of Creating High-performing Companies”.
Interestingly, the 8 factors that create trust have the acronym OXYTOCIN:
Now that we have a deeper understanding of what boosts Oxytocin production, let’s explore how Sankey uses this knowledge to cultivate trust among its employees.
Sankey’s Trust building Approach
Sankey solutions has embraced the science of building trust among its employees, following a remarkable approach that aligns perfectly with the acronym “Oxytocin.”
Let’s dive in further to understand what they are doing:
- Notice when people are doing something well, tell them! This is what Sankey solutions adhere to. Overtly, recognizing outstanding efforts through badges and awards inspires excellence and motivation and also inspires others to strive for excellence.
- But it’s not just about recognition. Sankey solutions empowers their employees with crystal clear expectations and trusty goal sheets that enables them to understand the path to achieve their objectives and measure their progress.
- Feel the buzz of autonomy as Sankey lets employees lead projects with flair. Trusting their capabilities, they foster a true sense of ownership and camaraderie.
- Transparency, the cornerstone of trust! Sankey believes that openness and disclosure and not withholding of information, can eliminate rumors and create a culture of transparency.
- Unity and belonging, the heartbeats of Sankey! Sankey organizes social activities and team-building events to create a strong bond among employees and to keep the fire of trust alive.
- Numerous studies have shown that acquiring new skills is not enough; if employees are not growing as human beings, their performance will suffer. Sankey’s continuous feedback and recognition elevate employees, nurturing their potential as both professionals and human beings.
- Sankey unlocks the power of vulnerability as its leadership isn’t afraid to show their human side and ask for help when needed. This courageous act not only builds trust but also inspires the idea that support is a natural part of growth and development.
Conclusion:
Sankey’s holistic approach to building trust is an extraordinary blend of recognition, empowerment, transparency, and support, creating a workplace where trust thrives, inspiring individuals to unleash their potential and achieve remarkable success together.
Our journey into the world of trust has been eye–opening and exploring the factors of OXYTOCIN has given us a clear roadmap to build trust in an organization. Building trust in the workplace requires effective communication, integrity, competence, empathy, respect, teamwork and recognition.
By focusing on these strategies, managers and employees can create a workplace where trust thrives, and people flourish. As we move on from the “Trust hormone” and Sankey’s inspiring methods, let’s embrace this wisdom and unleash oxytocin’s power to nurture trust in all we do.
-by Mansi Chopda