Cutting working capital by 25% using predictive inventory management

Supply chain disruptions were causing inconsistent replenishments, meaning our client needed a standardized approach to optimize store-level ordering and stocking decisions. But they lacked the analytical capabilities to assess which products should be carried at each location and how much inventory should be stocked—given customer demand variability and supply challenges. In response, West Monroe introduced a proprietary inventory strategy to optimize SKU effectiveness, profitability, and working capital. By building statistical forecasting models from internal sales data and understanding trade area market share, we provided a data-driven inventory strategy that aligned with our client’s growth ambitions. This approach ensured the right product was at the right store at the right time—laying the foundation for long-term efficiency and profitability.

West Monroe worked with our client to implement a market-driven inventory strategy tailored to each store. Our data scientists and retail experts collaborated closely with our client’s teams, integrating sales patterns, vehicle demographics, and operational constraints into a smarter inventory portfolio. We validated our inventory portfolio and stocking recommendations through back-testing in a digital twin sales pilot and selected pilot store locations. This collaboration empowered our client’s teams with the necessary framework, analytical tools, and financial insights to make confident, data-driven inventory decisions.

Through data-driven insights and collaboration, our client transformed its inventory strategy, reducing working capital by 25% and increasing inventory turnover. Optimized inventory portfolios—including improved purchasing habits—unlocked $24 million in EBITDA gains from lost sales capture and COGS reduction. Market share analysis also uncovered $50 million in potential EBITDA improvements by targeting under-indexed vehicle segments. With a clearer, more efficient inventory framework, our client now has the analytical capabilities to make smarter, data-driven stocking decisions, reduce costs, and capture new market opportunities—all while ensuring long-term operational efficiency.