Government Surplus Auctioneer Unlocks $3.3M in Annualized Cost Savings from Inventory Verification and Management Controls Implementation

A recognized leader in government surplus equipment auctions. This company operates through online auction purchasing with pick-up at one of two central US warehousing locations.

$366M

Valuation Benefit

$7.6M

Annualized Cost Savings & Avoidance

$22.1M

Discrepancy Resolution

Challenge

A rushed warehouse management system (WMS) implementation and a lack of workable inventory processes led to large discrepancies between system-reported inventory and physical inventory. A significant portion of their inventory was “phantom” and had significant location-control issues, and there were cultural barriers causing difficulty in correcting these issues. As a public company, they were also facing increasing audit scrutiny due to identified serious deficiencies.

Discovery

TPG identified and implemented the following programs for inventory and management that were necessary to allow the business to scale as required:

Phantom Inventory Remediation – Put health checks in place to sustain min. inventory levels and promote accountability
System mismatch remediation – automation to reduce processing time and manual errors
Financial Reporting Automation – reduced manual processes of financial reporting to reduce lead time and increase accuracy of reporting, building trust within teams
Cycle counting Program – Increase control and accuracy of inventory locations and quantity and avoid need for full physical count, reducing burden on employees
Controlled transactions on receipts, sales, transfer and adjustments; validated inventory with a single source of truth; created Business Improvement team to sustain improvements and drive continuous improvement
Created capacity to take on additional contracts without increasing labor
Other value-add initiatives including Receiving Process Enhancements; Warehouse Re-layout; IT Ticket Prioritization; Business Continuity Planning; Online Health checks Dashboard

Value Created

TPG worked with the client to reduce phantom inventory, re-implement location control, implement transaction controls, and implement a cycle count program, and build a culture of valuing accuracy to sustain the following results:

Reduced Phantom inventory 21% to <0.1% of total inventory
Reduced mismatched SKU count from 15,400 to 2,200
Reduced value of mismatched SKUs by $2.8M
Helped client pass three year-end external audits, remove a significant deficiency, and prevent Material Weakness

Figure 1: Inaccurate Inventory
Count (millions $USD)

Government Surplus Auctioneer Unlocks $3.3M in Annualized Cost Savings from Inventory Verification and Management Controls Implementation

Challenge

Discovery

Value Created

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