Inventory and Supply Chain Analytics
DATA AND BUSINESS INTELLIGENCE
Turning stock data into cash, availability and better reorder decisions at Kilima Hardware and Building Supplies
Prepared by Anita Analytics |
Q4 2026 inventory review | fictional company
Healthy
Overstocked
Slow-moving
Stockout
What we will cover today
AGENDA
2
1
Where we stand
Business context, data foundation, KPI scorecard
2
Fast and slow movers
ABC analysis, velocity matrix, stock aging
3
Stockouts and overstocking
Root causes, cash trapped, the paradox
4
Turnover and carrying cost
Turns by category, GMROI, cost of holding stock
5
Reorder planning
Formulas, worked example, policies, suppliers, seasonality
6
Impact and decisions
Dashboard blueprint, value, roadmap, the ask
THE QUESTION WE ARE ANSWERING
How do we carry less stock, and still say yes to every customer?
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
We hold too much of the wrong stock
EXECUTIVE SUMMARY
3
3.5x
Inventory turnover today, against a 4.2x target
8.4%
A-item stockout rate, against a 4% target
KES 390M
Stock older than 180 days, 27% of inventory value
KES 240M
Cash we can release within 12 months
Where we are
38% of inventory value sits in C-items that earn only 9% of revenue, while A-items run out 1 day in 12.
What it costs us
Holding costs run at about KES 321M a year, and we lose an estimated KES 340M of sales to stockouts.
What we propose
Classify every SKU, reset reorder points by class, clear aged stock and automate replenishment signals.
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Kilima at a glance
WHERE WE STAND
4
14
retail and trade counters across Central and Eastern Kenya
1
central distribution centre in Thika
21,300
active SKUs, from cement to cabinet hinges
KES 6.8B
annual revenue, trailing 12 months
KES 1.46B
average inventory at cost
380
active suppliers, local and imported
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
One trusted data foundation
WHERE WE STAND
5
Sources
ERP, point of sale, warehouse system, supplier EDI
Ingest
Nightly ELT, with 15-minute stock-on-hand deltas
Model
Star schema on item, location, date and supplier
Metrics
One governed KPI layer: turns, cover, fill rate
Act
Dashboards, alerts and replenishment proposals
94%
inventory record accuracy, target 98%
~240K
transactions processed every day
15 min
refresh of store stock-on-hand
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Inventory health scorecard
WHERE WE STAND
6
KPI | Today | Target in 12 months | Status |
Inventory turnover | 3.5x | 4.2x | ● Watch |
Days inventory outstanding | 104 days | 87 days | ● Watch |
A-item stockout rate | 8.4% | 4.0% | ● Critical |
Order fill rate | 92.7% | 97.0% | ● Watch |
Stock older than 180 days | 27% | 12% | ● Critical |
Gross margin return on inventory (GMROI) | 1.16 | 1.43 | ● Watch |
Carrying cost, % of inventory value | 22% | 18% | ● Watch |
Supplier on-time in-full (OTIF) | 78% | 92% | ● Critical |
Inventory record accuracy | 94% | 98% | ● Improving |
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
C-items hold 38% of stock but earn 9% of revenue
FAST AND SLOW MOVERS
7
Class A: protect
8% of SKUs drive 71% of revenue. Zero tolerance for stockouts.
Class B: manage by exception
17% of SKUs, 20% of revenue. Review weekly, act on alerts.
Class C: simplify and shrink
75% of SKUs tie up 38% of stock. Cut the tail, cap the cover.
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Four quadrants, four stocking strategies
FAST AND SLOW MOVERS
8
Hold selectively
Power tools, specialty fittings, premium door locks
24% of SKUs | 22% of stock value
Protect, never stock out
Cement, iron sheets, branded paint, roofing nails
9% of SKUs | 26% of stock value
Rationalise or exit
Legacy door hardware, discontinued tiles, one-off imports
46% of SKUs | 28% of stock value
Run lean and efficient
Nails, PVC pipe, binding wire, general fasteners
21% of SKUs | 24% of stock value
LOW ← GROSS MARGIN → HIGH
SLOW
SALES VELOCITY
FAST
How we classify
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Tiles and tools: 28% of stock, 16% of sales
FAST AND SLOW MOVERS
9
28% vs 16%
of stock value versus sales in tiles and tools
Cement is the opposite
6% of stock value drives 16.5% of cost of sales. It turns 9.6 times a year and cannot afford to run dry.
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
KES 390M of stock is older than six months
FAST AND SLOW MOVERS
10
27%
of inventory value is older than 180 days
KES 140M
over a year old, likely write-off exposure
Provision held today: KES 38M. Gap to exposure: KES 102M.
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Why we run out: five root causes
STOCKOUTS AND OVERSTOCKING
12
How we fix each cause
Dynamic reorder points
for stale and low reorder points
Lead-time-based safety stock
and supplier scorecards
Seasonal indices and promo flags
in the demand forecast
Inter-branch transfer rules
to use stock we already own
Cycle counts on A-items
to expose phantom stock
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Where excess stock is tying up cash
STOCKOUTS AND OVERSTOCKING
13
KES 229M
of stock sits above 1.5x its target cover
~40%
is addressable within 12 months through transfers, returns and markdowns
Tiles and tools alone account for 48% of the excess.
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
The paradox: out of stock and overstocked at once
STOCKOUTS AND OVERSTOCKING
14
Stocked out
Meru store, week 38
2.5-inch nails out of stock for 9 days. Contractors bought elsewhere. Thika DC held 41 days of cover the whole time.
Cause: no transfer trigger between DC and store
Overstocked
Embu store, same week
60x60 'Savanna Beige' tiles at 14 months of cover, with 2 sales in the last 30 days. Cash parked on the floor.
Cause: bulk buy to hit a supplier volume discount
AND
15%
of stockout events happened while the DC or a sister store held the item. The fix is network visibility and transfer rules, not simply buying more stock.
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Turnover lags target in every category
TURNOVER AND COST
15
How turnover is measured
Turns = cost of goods sold / average inventory at cost
Network: KES 5.1B COGS / KES 1.46B inventory = 3.5 turns, or 104 days of stock.
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Turnover is flat; the target needs a step change
TURNOVER AND COST
16
Moving from 3.5x to 4.2x turns means:
104 to 87 days
Days of stock on hand
1.16 to 1.43
GMROI: gross margin earned per shilling of stock
1.46B to 1.22B
Inventory at cost, KES, at today's sales
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Holding stock costs about KES 321M a year
TURNOVER AND COST
17
Cost of capital
KES 132M
41%
Storage and handling
KES 74M
23%
Shrinkage and damage
KES 45M
14%
Obsolescence and markdowns
KES 54M
17%
Insurance and taxes
KES 16M
5%
Total: 22% of average inventory value, against an 18% target.
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Four formulas behind every reorder decision
REORDER PLANNING
18
Reorder point
ROP = (d × L) + SS
Order when stock on hand plus on order falls to this level.
Safety stock
SS = z × √( L×σd² + d²×σL² )
Buffer against demand and lead-time variability.
Economic order quantity
Q* = √( 2 × D × S ÷ H )
Balances ordering cost against holding cost.
Order-up-to level
Up-to = d × (R + L) + SS
For periodic review: top up to this level each cycle.
d = average daily demand L = lead time in days σd, σL = standard deviations z = service-level factor D = annual demand S = cost per order H = holding cost per unit per year R = review period
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Worked example: cement, 50 kg bag at the Thika DC
REORDER PLANNING
19
Inputs from our own data
Average daily demand (d)
120 bags
Std. deviation of demand (σd)
30 bags
Supplier lead time (L)
5 days
Service level target
97.5% (z = 1.96)
Annual demand (D)
43,800 bags
Cost per order (S)
KES 2,500
Holding cost (H)
KES 45 per bag a year
132 bags
Safety stock
1.96 × 30 × √5
732 bags
Reorder point
(120 × 5) + 132
~2,200 bags
Order quantity (EOQ)
√(2 × 43,800 × 2,500 ÷ 45), about 20 orders a year
The reorder point in the ERP today is 540 bags, 192 short of the calculated 732. That is why cement stocked out in 3 of the last 6 months.
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Reorder policy by SKU class
REORDER PLANNING
20
Class | SKUs | Policy | Review | Service level | Safety stock method |
A items | 8% | Continuous review (s, Q), with auto-proposed purchase orders | Daily | 97 to 98% | Statistical: demand and lead-time variance |
B items | 17% | Periodic review (R, S), consolidated by supplier | Weekly | 95% | Statistical, rolling 13-week window |
C steady | 35% | Min/max with supplier-managed replenishment | Every 2 weeks | 92% | Fixed days of cover |
C tail | 40% | Order on demand or drop-ship; no stock beyond display | On request | 85% | None |
Seasonal overlay | Any class | Pre-season buy, 6 to 8 weeks before the peak | Monthly | 95% | Seasonal index multiplies demand |
Every parameter lives in the BI model and is recalculated weekly, with planner override and audit trail.
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Late suppliers inflate safety stock
REORDER PLANNING
21
+17 days
Apex Tools (import)
Consolidate shipments and buy earlier
+7.5 days
Kijani Tiles
Renegotiate terms; local alternative for fast SKUs
+2.8 days
Coastline Steel
A-item supplier: weekly scorecard and review
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Seasonality should move the reorder point
REORDER PLANNING
22
Roofing and cement peak Feb to Mar, ahead of the long rains
Paints peak Oct to Dec on festive and finishing demand
Seasonal index multiplies d in the ROP; forecast accuracy on A-items 71% → 85%
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Blueprint: the Inventory Health cockpit
IMPACT AND NEXT STEPS
23
Executive overview
Velocity and ABC
Availability
Replenishment
Suppliers
3.5x
Turns
8.4%
Stockouts
104
Days cover
92.7%
Fill rate
Built for three audiences
Executives
Weekly cash, service and risk view
Category managers
Velocity, aging and reorder-point exceptions
Branch managers
Store alerts and transfer suggestions
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
The prize: KES 240M of cash and KES 95M a year
IMPACT AND NEXT STEPS
24
KES 240M
one-time cash release in 12 months
KES 95M
annual run-rate: 53M lower carrying cost, 42M extra gross profit
~4 months
payback on a KES 28M programme cost
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
A 12-month roadmap in four phases
IMPACT AND NEXT STEPS
25
Weeks 0 to 6
Baseline and cleanse
Weeks 6 to 12
Classify and clear
Months 4 to 6
Automate reorder
Months 7 to 12
Optimise and scale
Kilima Hardware and Building Supplies | Inventory and Supply Chain Analytics | Illustrative data, fictional company
Four decisions we need today
THE ASK
1
Approve the clearance envelope
Up to KES 18M of markdown and return costs on stock older than 365 days.
2
Mandate class-based reorder policy
A, B and C items follow the policy table, with logged planner overrides.
3
Fund the analytics team and platform
Two analysts, one data engineer and BI licences, within the KES 28M budget.
4
Name an owner for every category
Each category manager is accountable for turns, cover and stockout rate.
Thank you. Questions and discussion.