Supply chain optimization for electrical wholesalers
If wholesalers want to survive in the Internet age, they must be able to deliver more and more items in ever shorter timeframes. To prevent stock levels from exploding with a hundred thousand or more items , only automated scheduling can reduce stock levels without dragging delivery readiness into passion or, alternatively, causing personnel costs to skyrocket. Advanced planning & scheduling software such as DISKOVER SCO from SCT GmbH can help here. This is the experience of ASAJ, a wholesaler organized in FEGIME. Today, we are used to receiving even the most exotic products by post in batch size 1 within 24 hours. This also has a huge impact on B2B demand in retail and trade. Wholesalers must expand and/or deepen their product range in order to reliably meet the increasingly fragmented demand. However, warehouse capacities for fast delivery cannot be expanded at will, as increasing product diversity also ties up costs. In addition to the pure capital commitment, which ties up large amounts of liquidity that could possibly be used more effectively elsewhere , inventories cause 18 to 30 percent of inventory values in running costs per year. These are made up of capital costs, insurance, administrative expenses, obsolescence, scrapping and other costs. Wholesalers have to pay these costs if their logistics chain is not right. But how can you increase delivery readiness and reduce stocks at the same time, despite increasing article numbers and decreasing demand per article?
Optimize scheduling processes
First and foremost, it is a question of better scheduling processes. For example, fast-moving items can be ordered at shorter intervals. This reduces storage capacities. In turn, products that are rarely in demand are only ordered when needed and removed from the warehouse. In most wholesale companies, it is also possible to optimize the logistical parameters. For example, safety stocks are often planned on instinct and adjusted ‘as required’ without generally applicable rules. Filling a pallet space in the truck with slow-moving items just to save freight costs can also drive up stock levels ‘sustainably’. It is therefore important to optimize many things across the entire supply chain.
Method and tool skills
Method and tool skills are required for this. One of the most important tasks here is an extended ABC analysis. In other words, a classification of the complete range of articles according to- ABC economic significance,- XYZ regularity of consumption,- STU number of customers per article and- ELA life cycle These classification characteristics are important parameters for deciding which planning and replenishment parameters should be set for which articles and which article classes should be planned and replenished in which way. With such basic analyses, it is possible to quickly reduce existing stocks and at the same time increase delivery readiness. But all such analyses and the resulting measures are not enough if, for example, dispatchers are not supported by suitable software . The Polish wholesale chain ASAJ Sp. Z o.o., which operates in the electrical and lighting technology sector and is a member of FEGIME Poland, also came to this conclusion. The company operates 21 branches, employs 300 staff and its product range currently comprises around 275,000 items that need to be replenished daily. The number of items alone gives an idea of how important a modern IT system is. For a long time, ASAJ relied on the expansion of its ERP system to effectively support the employees of the purchasing department in the creation of delivery orders. Increasingly, the question arises as to whether the commitment of a single IT department is sufficient to keep up with the mature solutions of special forecasting and scheduling systems available on the market and whether the know-how of further development can be maintained and expanded within the company.
ASAJ came to the realization that a massive step forward could improve competitiveness and significantly reduce the company’s running costs. In order to develop the strategic guidelines for modern planning and scheduling for ASAJ, ASAJ entrusted itself to a logistics consulting specialist and together defined four goals to be achieved with the use of such a software solution:
- Reduction in the amount of work involved and therefore a reduction in the costs incurred when preparing orders.
- Complete automation of replenishment of the 21 stores from the three central warehouses.
- Complete automation of the stock transfer of articles with a low turnover rate.
- Reduction of stock levels and simultaneous increase in delivery readiness.
For the implementation, the Polish logistics consultants recommended the advanced planning and scheduling (APS) software tool DISKOVER SCO, which is produced by SCT GmbH in Herzogenrath/Aachen and is distributed and introduced in Poland by the implementation specialist RCS. Once the SCT and RCS team had been selected, ASAJ’s purchasing department drew up a detailed specification of ASAJ’s specific requirements and agreed these with RCS. DISKOVER did not have any standard interfaces to the Comarch ERP XL ERP system used by ASAJ. However, thanks to the IT department’s extensive detailed knowledge of the COMARCH system, this was quickly implemented within a month.
Straightforward introduction of the new APS software into everyday working life
The second stage in the introduction of the APS software involved user training. The on-the-job training approach, in which employees are trained by interacting directly with the new software in their day-to-day work, proved successful and was largely completed after just three weeks.
A real challenge in implementing the APS software was choosing a time for the go-live, i.e. the complete changeover from the previous in-house ASAJ tools for forecasting and ordering to the DISKOVER system. In practice, this meant that the previously used methods and ways of thinking in terms of minimum and maximum stock levels had to be replaced by the more statistical concept of delivery readiness level and safety stock . Ultimately, this changeover was implemented for the entire company in just one day, as the purchasing department was very well prepared for the independent operation of the APS software. To further increase the security of the project, RCS supported the users at ASAJ during the start-up phase by telephone and remote access via team viewer. During the first weeks of productive operation, RCS also supported the ASAJ employees in optimizing the most important scheduling parameters. Robert Dabrowski, the project manager, summarizes: “Our partner, RCS, always answered our questions promptly and provided us with constant support in setting and optimizing the parameters. The complete implementation of the APS tool took just 3 months from signing the order to going live.”
All targets successfully achieved
The four goals of the APS implementation were all successfully achieved with DISKOVER and thanks to a clever and pragmatic implementation concept . “The overarching goal of the implementation is to achieve maximum profit with minimum capital expenditure,” explains Kamil Kulma, Production Manager on the project steering committee. “We are approaching this goal step by step and DISKOVER SCO is helping us to increase our competitiveness and significantly boost our profits. Specialist article, Initiative Mittelstand, published on 12.09.2016ByAndreas Capellmann and Mariusz Zdanowiecki
