Successful Case 1

Background

A well known telecommunication manufacturer has wide geographic customers, who require a full range configured options for their different needs. Such a niche market pushes the company has to maintain a high profile SKUs on its raw material. As market demand varies, it’s hard to be followed by a preliminary sales forecast. In order to minimize losing sales, the company decided to trade a high raw material inventory. The decision results a big inventory investment, a long engineering change phase along with a high write off, and a long customer delivery lead time. The Yearend finical report revealed an unsatisfied profit was strongly offset by a huge operational cost, even the sales revenue seems quite reasonable. Now, the management realized that an immediate improvement has to be done to such a low efficient but high cost supply chain operation.

Diagnose & Solution Proposal

After data collection, few rounds of discussion with the related staffs, and many researches, ASCMS consultant team made the following proposals:
1.To review and improve forecasting method, setup a regular forecasting process and tracking system
2.To build up a cross function marketing-analysis team to follow a routine mechanism.
3.To replace previous numerous individual configured BOMs by implementing module BOM system for better commonality consolidations among different options.
4.To implement ABC principles among all materials with different management target, set up inventory turns appraisal on routine review basis.
5.To organize daily cycle counting and measurement on Excess & Obsolete inventory, to improve material accuracy and less write off though a timely cleaning cycle.
6.To found a Engineer Change group to mange the changes, setup KPI on inventory write-off and costs.
7.To track performance on backlogs and delivery lead time, make continuous improvement by keep analyzing root cause.

Project Performance

After 3 months project implementation, the major performance indicators are significantly improved:
Inventory turnover increased 20%
Cycle counting accuracy increased from 85% to 97%
Monthly inventory write off value decreased 30%
Average delivery lead time reduced 3 working days.
The progress meets both sides anticipation, meanwhile, the related working staffs are trained by ASCMS’s consultant though the whole project. It’s highly recognized by the customer.