\nGremlin Electronics Inc. is one of the largest companies in the European electronics industry. Gremlin Electronics procures most of the components for its products, most of which are manufactured according to its own designs, in China. Delivery times are between 60 and 150 days. The transportation time alone for container shipments from Asia is around six weeks. Gremlin Electronics’ customers are predominantly specialist and wholesale companies and demand the highest delivery readiness at all times. At Gremlin Inc. around 20,000 customer order items are received every day – mostly with a delivery time of 24 hours. A sufficiently high stock level is therefore required due to the long procurement lead times. However, if the demand situation on the customer side changes, the items procured in advance are no longer needed and therefore become excess stock. In addition, the logistics costs mean that the containers from overseas are completely infested. This means that larger quantities have to be ordered on a regular basis than are currently required. A smaller proportion of the order items relate to so-called “exceptions”.<\/p>\n
These are sporadically occurring, usually very large consumption quantities that do not have to be delivered within 24 hours, but only after an agreed delivery time. Examples of such exceptions are promotions or new installations in customers’ sales branches: The customer needs one-off large quantities of certain items that must be delivered at a specified time. If the deadline is postponed or the customer changes the purchase quantity at short notice, this drives up stock levels.<\/p>\n
Improve delivery readiness, reduce costs<\/h3>\n
The project at Gremlin Inc. had the objective of increasing delivery readiness and at the same time significantly and sustainably reducing logistics costs. The consultants from Abels & Kemmner examined both the planning and scheduling methodology and the existing system support in order to identify potential for improvement. Right at the start of the project, the requirements for the data to be provided from the ERP system, which was needed for various analyses and simulations by the consultants, were agreed. The consultants use the DISKOVER SCO simulation system to carry out the analyses and simulations. With this system, the logistical behavior of the entire value chain can be dynamically simulated and thus made predictable.<\/p>\n
With the help of the simulations, the consultants determined with which. parameter settings of the ERP system, which delivery readiness can be achieved at which logistical costs. Examples of control variables are Batch size and minimum order quantities, different replenishment times, forecast, safety margin and scheduling procedures as well as process parameters.<\/p>\n
The core conceptual measure of the project was the introduction of end-to-end planning and scheduling of the flow of goods. This process starts with the classification of the articles and continues with the set of rules for disposition. The latter influences both sales planning and the scheduling itself.<\/p>\n
A key component of the new planning process is the regular classification of the complete product range according to<\/p>\n
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- ABC – economic significance,<\/li>\n
- XYZ – regularity of consumption (assessment of predictability) and<\/li>\n
- STU – number of customers per item and<\/li>\n
- ELA – Life cycle.<\/li>\n<\/ul>\n
These classification features not only provide transparency about the composition of the current product range, but are also important parameters for deciding which planning and replenishment procedures and parameters should be set for which item.<\/p>\n
Automatic data maintenance for large article quantities<\/h3>\n
Due to the large number of different input parameters, this optimization step can no longer be carried out manually. The consultants therefore drew up a set of rules that precisely defines which article classes are to be planned and scheduled and how. The set of rules is processed automatically by an extraction from the DISKOVER SCO simulation system. Efficient and reliable monthly updating is therefore also possible for very large product ranges.<\/p>\n
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<\/a>After article classification and application of the MRP set of rules, the ERP system now contains the settings for how each article is to be planned and scheduled. Planning is carried out on a monthly basis and per individual item. Further differentiation by sector and customer is planned for the future. Supported by DISKOVER SCO, predecessor and successor relationships are used for forecasting wherever possible. Intensive monitoring of the start-up process with prompt correction of planning is firmly anchored in the process.<\/p>\n