- 25% reduction in safety stock levels
- Maintained critically high service levels
- Achieved results verified by internal audit
- Accomplished cost savings and fill rate requirements in half the projected timeframe
- Results obtained with existing ERP systems
“As part of our decision process, TCLogic BIDS™ analysis included every SKU at every Juno distribution center to determine what improvements could be achieved. We got comfortable that we could reduce safety stock by 25% while consistently maintaining extremely high in-stock availability. Today inventory reductions have occurred twice as fast as we projected.”
INVESTMENT IN THE FUTURE
To succeed, companies need to continuously explore ways to reduce costs while increasing quality and service levels. For this manufacturer, improvements have included importing components from Asia, adopting a lean manufacturing process, and optimizing inventory beyond the capabilities of a legacy ERP system.
The challenge is knowing what benefits a new solution will achieve, at what cost, and over what time frame before making a major decision. The Director, Production/Inventory Control comments, “As part of our decision process, TCLogic BIDS™ analysis included every SKU at every Juno distribution center to determine what improvements could be achieved. We got comfortable that we could reduce safety stock by 25% while consistently maintaining extremely high in-stock availability. Today inventory reductions have occurred twice as fast as we projected.”
CRITICAL INVENTORY DATA & ANALYSIS ALL IN ONE PLACE
TCLogic solutions enhance or improve upon a variety of information and calculations necessary for a company to make performance improvements in the complex area of inventory optimization. In this case, TCLogic had to analyze and implement business rules for each SKU at each distribution center, including the service levels by part. A new approach to evaluate forecast accuracy was implemented to provide ongoing error of estimate analysis. Other key performance data and metrics are accessed from the ERP system so that all critical inventory-related information can be immediately accessed and analyzed simultaneously. The result has been a reduction of excess safety stock in the amount predicted while maintaining critically high service levels.
MAXIMUM INVENTORY IMPROVEMENT WITH MINIMUM RISK
The evaluation and implementation process demonstrates a cautious, well-informed, and successful approach to achieving inventory improvement goals without taking a lot of risk.
First, TCLogic performed a single point-in-time analysis of every SKU in every warehouse. This revealed a close approximation of what improvements in inventory levels could be achieved at a variety of targeted service levels.
Second, they used TCLogic’s solution to optimize a limited number of critical SKU’s for 90 days, which confirmed the initial estimates of improvement potential.
Third, they approved a full implementation of the optimization solution on a monthly subscription basis, with an option to purchase the software solution at a future date. This allows the company time to confirm that the company’s projected IRR for this project will be achieved.
A subscription with a purchase option also gives the company flexibility in the event of a change in strategy regarding their ERP and Supply Chain systems and affiliated companies.