Optimised inventory management at Otto Olsen

Otto Olsen is one of Norway’s largest suppliers of technical products. With a broad assortment and high demands on availability, efficient inventory management is essential to the business.

Inventory planning

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Better inventory control and higher turnover at Otto Olsen

Otto Olsen is one of Norway’s largest suppliers of technical products. Six people are responsible for managing inventory levels, with a focus on improved profitability, increased inventory turnover and the highest possible level of service to customers. For a long time, purchasing and inventory levels were handled manually, using static min and max points in the Jeeves ERP system as well as Excel.

It was precisely the simplicity of the system that we fell for. It’s easy to understand, what you see is what you read and you do not have to deal with complicated formulas.

Are Saga

Purchase manager, Otto Olsen

The challenge

Manual handling and limited control

The manual handling made it difficult to adapt inventory levels to changes in demand. The min and max levels in use were static and quickly became outdated, which impacted both inventory turnover and availability. At the same time, there was no clear way to distinguish between important and less important products, making it difficult to prioritise stockholding.

This resulted in an increased risk of high inventory values, while stock levels often included shortages, with out-of-stock products negatively affecting the service level. Overall, there was a clear need to gain better control over the purchasing process and ensure that inventory more effectively supported both profitability and growth.

The solution

Simple and user-friendly inventory planning

Otto Olsen chose to manage the project internally and set up a working group that evaluated three different systems. The guiding principle was “the simple is often the best”, and the solution therefore needed to be easy to understand and use, while at the same time delivering quick results in terms of improved service levels and reduced inventory levels.

The choice fell on IMI’s inventory planning solution, a system for forecasting and product flow management developed in close collaboration with buyers and Lund University. The simplicity of the system was decisive, as it was easy to understand and use without the need for complex or difficult formulas.

The system calculates forecasts for future sales and takes into account both seasonal variations and promotions. These forecasts are used to generate order proposals, which are sorted by supplier and presented in a structured way that makes them easy for buyers to work with. The simplicity also makes it possible for buyers to work more strategically, rather than spending time on detailed management at item level.

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The result

Increased control and improved inventory performance

IMI’s inventory planning delivered results quickly, already within the first six months. For the product groups where the system is used, inventory levels have been reduced while service levels have improved. Inventory turnover has increased from approximately 1.5 to between 3.5 and 4 times per year, demonstrating more efficient inventory management and better use of capital.

The solution has made it possible to work more consistently across the organisation. Buyers now work in the same way, and purchasing decisions are more closely aligned with the company’s strategy. Managers have gained better visibility into purchasing activities and a clearer overview of how inventory and flows are developing.

With ABC differentiation, it has become easier to prioritise the most important products, where a smaller share accounts for a large part of sales. This has reduced the time previously spent on slow-moving items and made it easier to ensure availability where it matters most.
The system’s simulation capabilities have also provided better decision support. It is now possible to analyse the consequences of changes in advance, such as how an increase in service level will affect tied-up capital, giving a clearer understanding before decisions are implemented.

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