Wayfarer Consulting, LLC

The Challenge:

Improve inventory planning to ensure product availability. Sales of key equipment has a larger quarterly seasonality component.

The impact:

Change how the factory plans material and schedules work and interfaces with the Distribution Center

The Outcome:

Improved product availability for key equipment and accessories while staying within inventory budget

Reduced manufacturing lead times from 3-5 weeks to 2-3 weeks

Background:

A growing medical device manufacturer had needed to improve product availability to maintain aggressive growth targets. Prior practice had been to plan production for subassemblies in monthly batches with level production of equipment, building inventory to have units available for quarterly sales push.  The result was shortages of components, delays in unit shipments and the Distribution Center not having accessories for customers.  The company was not using MRP though a consultant had done the work to enable them to do so.  They never acted on it.

I developed the following plan:

• Update the database to support MRP
• Develop forecasts for key products
• Manage shop loads

Subsequent to the consultant’s work on MRP readiness, the company converted to Oracle, losing much of its information on lead times and lot sizes. This had to be reloaded with help from IT for mass updates of lead times.

Implementation of MRP required support from the IT department to automatically schedule job to run the master schedule and MRP as well as a tool to upload forecasts into Oracle.

Oracle had the standard forecasting ability of a large ERP system, but the monthly buckets it used meant that ALL product requirements would land on the first of the month.  This meant either a lot of manual rescheduling or minimal use of MRP.  A new approach was needed. 

While demand for the primary equipment and consumable would be manually scheduled to control and build inventory, as needed, other products could be scheduled based on forecasts.

Sales history was analyzed which identified products whose demand characteristics suggested whether monthly, weekly, or daily forecasts were warranted.  Using an external database, the weekly and monthly demand items were further split to be scheduled on different days of the week or month to level the load on the factory.  The output was then loaded into the Oracle master schedule via an IT provided upload program.

Now MRP would generate requirements that more truly matched the business needs.  A Planner/Scheduler was hired, and Buyers trained on the use of the MRP outputs.

Oracle had the capability to have multiple MRP scenarios, which could be used for investigating alternatives.  Through this mechanism, Production saw that scheduling subassembly builds in smaller batches would drastically reduce lead times.  The added benefit was that MRP gave advance notice of products which need production sooner than the old fixed monthly schedule.  Thus production lead times were reduce to 2-3 weeks for equipment, and product availability for accessories increase significantly at the Distribution Center.