Many organizations fall into the trap of forecasting demand as a go-to solution for all products and services. Over the past year, the Governor’s Office of Management and Budget has worked with the Utah Dept. of Alcoholic Beverage Control (DABC) to improve operations.
In the past, DABC tried to forecast demand for its products. It also relied on vendor discounts to drive the types of products it purchased. By moving from a forecasting model to one that focuses on dynamic replenishment based on customer purchases, DABC has achieved the following results to date:
- Sales growth of approximately $22 million per year
- Reduced store inventory by 19%
- Reduced central warehouse inventory by 24%
- Improved purchasing power with vendors
Running DABC is part of the state’s statutory responsibility. If the state is going to fulfill this role, it needs to have a well-run operation to meet customer demand. These results are just the beginning. Small changes can lead to big results, but we must first identify the right problem to solve. Congratulations to the team at DABC for their hard work on these improvements.