Elekta, a Swedish medical company which provides equipment for radiation therapy, is using forecasting software from Inform to manage spare parts in its warehouses.
The company needed a way to forecast stock levels of spare parts across its global network of 20 warehouses, a task that could not be completed easily with its existing Movex M3 ERP system, explains Mark Purchase, global logistics manager at Elekta. "We run a low-volume but complex operation to install, maintain and support 2,000 sites globally. Because of the mission-critical nature of the parts support operation, we need to ensure all of our customers maintain maximum use of their investment in patient treatment systems.
Purchase says ERP is unsuitable for the low volume of parts that needed to be managed, since ERP systems are transaction processors geared towards high-volume manufacturing. He says ERP integrates sales, finance, supply finance in one system, but spare parts replenishment is a fairly specialised areas in the business. "It requires very low-volume forecast - almost random - ERP is not configured for this type of forecasting."
"ERP would provide you with a lot of data, with lot of fields to maintain," he adds. If Elekta had used its ERP system to support the parts replenishment business process, it would have required an awful lot of data manipulation at item level and item location, according to Purchase. Then when something changed, he would have to reset everything to do the forecast in a different way. "At end of this year I will be running 20 locations with 2,500 SKUs per location. I don't want to perform constant maintenance and manually go into the ERP to make forecasts."
Instead, Elekta opted for add*One Inventory Optimizer from Inform, which takes a nightly feed from the Movex M3 ERP system, to forecast demand for spare parts globally and respond to the more extreme movements as soon as they register as demand.
Previously forecasting demand for spare parts was based on fixed stock levels and usage. Purchase says: "We used to look at the data in the ERP and feed in parameters like maximum and minimum stock levels. We would repeat this exercise globally once every three months."
Now forecasting can be conducted on a daily basis. "With Inform, we can review a wide range of forecast models and select the most appropriate model automatically."
Purchase adds: "We take an SQL extract from the ERP and pass onto Inform six nights per week.
Since the data from the ERP system is processed overnight, the team at Elekta has a complete overview of the current and projected stock of their whole portfolio, allowing a complete recalculation of the global position in readiness for the next day. Exception-based alerts provide visibility of where inventory could be further optimised and make the immediate supply risks clear to all.
By adopting this process as the centre of new working practices, all planners now follow a dedicated work flow to move, increase or delay supplies in line with the latest demand pattern. This has acted as a turbo-boost to the Movex M3 ERP system, and together the complimentary systems are driving forward a more efficient planning process.
The system is used alongside the ERP system, as there is no integration from forecasting back into the ERP. This means users need to go back into the ERP system to manually place orders for new spare parts. However he adds: "Within the next 12 months we will link back into the ERP system," which will remove this manual step.
The implementation went live a year ago and the company is now looking at which other parts of the business would benefit from Inform.
The company is adding remote diagnostics to its clinical platforms, which Purchase says will enable Elekta to more accurately determine when parts are likely to be needed.