From excess inventory to could-be-built: A component optimization success story

"Instead of asking our customers to pay for excess inventory or negotiating carrying charges for it, we wanted to help our customers use their available inventory to build saleable products"

However, this manual, time-intensive work meant its teams had to settle for good-enough results, not the highest-quality outcomes they knew were possible.

An optimization engine creating higher profit potential for customers

When Celestica started its search for another solution, its target was to find something capable of generating an optimal build plan, achieving maximum revenue, and making the best use of inventory on-hand. Its team chose a solution that combined optimization, heuristics, and AI/ML. This fusion of techniques gave them the ability to solve complex, multi-dimensional problems. They could then create could-be-built plans quickly and accurately to provide customers with the best opportunities for their excess inventory.

The solution, component optimization in Kinaxis Maestro, followed rules set by Celestica to generate build plans that prioritized for inventory, supply, budget, and revenue. "The business results were astonishing," says Simpkins. "We gave Maestro a dollar limit and let it determine the best way to spend it. It takes every possible purchase combination using the budget value we've given it. Then it calculates every possible assembly-build combination, using the known E&O, plus every purchase component combination. Maestro then analyzes all those combinations and returns the single build plan that generates the best revenue and a list of parts to buy to fulfill that plan. And it does it in a matter of seconds."

The results were immediate and impressive:

• $250,000+ in average value per customer using only excess on-hand components
• $400,000+ in average value per customer when combining excess inventory with current supply
• 10% average mitigation of excess and obsolete inventory per customer using excess on-hand and current supply

[Read more: Breaking the boundaries of traditional supply chain optimization - How Celestica transformed excess inventory into value with Maestro™]

Changing the conversation

The impact went beyond numbers. Celestica's teams were now equipped to have proactive, collaborative discussions with customers. Forecasts could be adjusted, mitigation plans initiated, and new revenue streams unlocked-all from what was previously considered waste.

"We've empowered users with the tools and capabilities to significantly improve our customer service offering," said Mary Simpkins. "We've changed the excess and obsolete inventory conversation into a world of opportunities"

By viewing excess inventory as a starting point rather than a dead end, Celestica turned a common challenge into a competitive advantage.

Kinaxis helps leading global companies gain agility and improve opportunities with the right balance of accuracy and speed. Learn moreabout supply optimization, could-be-built, and other optimization capabilities in our AI-powered supply chain orchestration platform, Kinaxis Maestro.

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