How to avoid inventory stockouts at Royal Canin DACH? A Six Sigma DMAIC case study

Details

Supervisors

Semal, Pierre

Faculty

Louvain School of Management

Degree label

Master [120] : ingénieur de gestion, à finalité spécialisée

Abstract

An ongoing challenge in inventory management is the avoidance of stockouts. Stockouts negatively impact customer satisfaction and loyalty and induce significant losses for the company. Royal Canin DACH, a cat and dog food manufacturer, faces the challenge of recently rising stockout numbers. This thesis aims to identify the causes for the increasing stockouts and find improvement and prevention strategies. The study is structured as a Six Sigma DMAIC project and is based on the case study research design by Yin. The primary sources of information were quantitative time-series data and qualitative data, including semi-structured interviews, summarized in the Measure phase. The root cause analysis was conducted by applying the Ishikawa diagram in the Analyze phase. Improvement measures from the perspective of the demand and supply planning team of Royal Canin DACH were elaborated in the Improve phase, followed by suggestions of control mechanisms for monitoring the stockout situation in the future. The analysis revealed three systematic root causes responsible for the stockout increase as well as causal and contingency factors. The improvement strategies were separated into long-term improvements entailing higher investments and quick wins to take immediate action. This thesis has highlighted the fundamental issues in the demand and supply planning process of Royal Canin DACH. The study also contributes to the research stream by providing insights into the stockout causes and improvement approaches from the manufacturer’s perspective, while most literature solely focuses on the retail environment.