Throughout a financially turbulent 2009, the Supply Chain at Electrocomponents plc needed to better integrate into the business and become more intelligent, agile and effective. Just two years into our long-term transformation journey, our key innovations have been to:
- Introduce formal forecasting.
- Embed leading Supply Chain thinking including demand planning and SIOP where many thought it couldn’t be done in an industry like ours.
- Integrate leading edge forecasting technology.
- Identify unsatisfied demand resulting in back orders, lost sales or substitutes.
- Transfer our Supply Chain from the UK to an international focus.
The Burning platform…
Our Electronics Division’s strategy to expand our global range by 120K products over the next 2 years required a step change in forecast accuracy and safety stock policies. This in turn would support the high level of New Product Introductions (NPI) that would be involved. Our outdated processes had been designed to cope with circa. 5,000NPI/annum and had to be changed so that they would be capable of coping with 5,000NPI/month.
A key challenge for the Supply Chain in most organizations is aligning the business behind a single set of numbers. We chose a SIOP process rather than S&OP process to manage this because we do not consider inventory to be waste, unwanted or an accident in our business. Inventory is fundamental to our business model as a distributor.
Above all else, it has been real innovations like positioning our Supply Chain within a Demand Driven Value Network , SIOP, and the development of true lost demand that have started to shape a truly agile and intelligent global Supply Chain at RS Components. In the future we hope to integrate trend software drawing from our eCommerce site to further strengthen our demand signals.
Our Supply Chain performance has improved with:
- Increased service to our customers whilst adding nearly 60,000 products per year.
- Process 40,000 parcels per day (1 every 2 seconds), and deliver 99.8% on time in full.
- Maintain stock turn and increase cash flow during the difficult transition period.
- We have gone from 5,000 New Product Introductions (NPI)/year to 5,000 NPI/month!
- Stock Availability greater than 97.5%.
- Reduced Supply Chain cost by 9.5%.
We have learned a lot of lessons, some of them the hard way, as we have taken this journey and I look forward to sharing our experiences with you at IBF’s Demand Planning & Forecasting: Best Practices Conference in Dallas, Texas.
Head of Global Supply Chain Planning
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