Company Facts
- DKC company is among the largest manufacturers of cable management systems and low-voltage equipment in Europe.
- 9 product groups
- 35,000 SKU
- 42 branches in 7 countries
- 25 production and storage complexes
- 80 distributors
- 900 sales offices
Inventory Management Specifics
The company works directly with distributors, not end consumers. Distributors require adherence to delivery schedules and sufficient ready-made products in warehouses. Therefore, the company needs to maintain a balance. On one hand, if you store too much stock, working capital will be frozen in product assets. On the other hand, there should be enough goods so that distributors do not buy substitutes from competitors. For some product positions the delivery lead times can reach 90-180 days. Hence, inventory planning needs to be done for a long term.
Implementation Prerequisites and Decision Making
Prior to the implementation of Forecast NOW!, the company managed its inventory using Excel tools and the SAP ERP system. The company was actively developing, and the volume of work was growing. Additionally, the human factor played a significant role. The larger the data volume, the higher the risk of missing something or making a mistake. The company was looking for a solution that would allow systematic inventory management and ensure accurate calculations. It was important that the system was flexible enough to be customized to the company's specific operations. Four vendors participated in the system selection tender. Forecast NOW! conducted a Efficiency Insight Assessment on the company's real data. After receiving the results, the company made the final decision to collaborate.
Implementation and Usage
The implementation of the system began with a standard procedure - integration with the company's SAP accounting system. After this, we started training the employees. Usually, the learning process consists of 10-12 online-sessions. They occur once a week so that employees have time to immerse themselves in the work with the program, apply new knowledge in practice, and accumulate questions. Starting from February 2020, 3 people were implementing and adjusting the program, in August another employee joined. There were difficulties, but all of them were technical: it was necessary to correctly load a very large volume of the company's data into Forecast NOW!.
Checking Calculation Accuracy
The transition to Forecast NOW! took place in 5 stages. Initially, the company wanted to ensure the accuracy of the program's calculations. For this, the results that the program obtained were compared with the calculations made by the old methodology.
First, they chose several suppliers and about 20 product positions from different categories and various production sites to obtain a representative sample. They calculated the data in Forecast NOW!, then loaded it into SAP and compared it with what was there before. When discrepancies arose, the company managers, together with the support service, figured out why the program made such calculations. When needed, adjustments were made to the settings.
In the next stage, they checked the universality of the established rules for calculating the optimal product stock. For this, all 35,000 product positions were divided into 4 groups, and calculations were made using Forecast NOW! step-by-step for products from each group, and then they checked whether the new rules apply to them. As a result of the testing, they found the optimal settings for the program. The whole process took about 6 months.
The DKC company's implementation team chose a correct and thoughtful approach. It allowed:
- To debug data exchange issues at the first stage of implementation;
- To gradually get acquainted with the interface and capabilities of the program and to find the optimal settings and parameters on a small familiar assortment;
- To quickly learn to interpret the program's calculations when necessary and take into account the specifics of the business in the calculations; In the end, to set up the program for the entire assortment."
Head of the Forecast NOW! Implementation Department.
Currently, the company actively uses the program to calculate inventory stock on a weekly basis for production orders, build a forecast for product departure from the warehouse, and conduct inventory analysis.
Benefits of Usage
For 10% of all product nomenclature in the company, the need for storage was reviewed. The warehouse assortment expanded by 2500 SKUs, which should positively impact the profit. Conversely, about 1000 SKUs were transferred to an order-based format.
The load on the product marketing department has decreased. Previously, department employees were actively involved in demand and inventory planning. Now, there is no need for that, allowing more time for promotion and development of new products.
The overall workload on the staff has decreased, making inventory planning simpler. There is no longer a need to do calculations manually.
The number of employees who were previously involved in planning and inventory control has decreased from 10 to 2 people. They do all the calculations through Forecast NOW! The company's planning and economic service works with the results of the program's operation.
"Thanks to Forecast NOW! we have been able to significantly reduce the load on employees and systematize the inventory management process. Several departments were previously involved in planning. Now all the main functions are accumulated in the inventory management department."
Head of the DKC Planning and Economic Service.
