Eliminating More Than $23M in Unnecessary Inventory

How a component manufacturer simplified product architecture to reduce inventory and make ERP execution more reliable.

The Business Challenge

A manufacturer of components used in gaming equipment maintained 268 different subassemblies, each costing approximately $1,000. When production ran short of the needed configuration, employees took parts from other subassemblies to complete orders. This practice created scrap, obscured material requirements, and made it difficult to establish dependable bills of material for an ERP system.

What We Discovered

The underlying constraint was not simply an inventory-control or ERP problem. The product architecture required the company to stock too many finished subassembly variations, even though production could reconfigure parts to meet different requirements. The same flexibility that helped employees complete orders was undermining inventory accuracy and system control.

How We Changed the Operating Model

We challenged the assumption that each variation needed to be held as a separate subassembly. Working with production, we explored redesigning the product around a small number of core subassemblies and configurable kits. This moved complexity from stocked inventory into a more deliberate configuration approach, making material requirements more manageable.

Business Results

The company moved from 268 subassemblies to two core subassemblies, supported by 25 configurable kits costing approximately $50 each. At the same output volume, inventory fell from $26.8 million to under $3 million—a reduction of more than $23.8 million.

Why It Matters

The opportunity was not to manage the existing 268 items more efficiently. It was to redesign what the business needed to stock. Product design, production practices, inventory policy, and system requirements had to work together to make the business simpler and more predictable.