May 1997, Volume 14, No. 5
|
|
May 1997, Volume 14, No. 5
|
In addition to its manufacturing responsibilities, the company distributes to more than 6,000 customers — including over 1,500 of its own American Tires and Service Company stores — making sure that each tire is in the right place at the right time based on forecasts of future product. "It used to be impossible, if the customer expected any reasonable level of service," said Herb Knopp, executive director of logistics at Bridgestone/Firestone.
In the past, there were periods where the company had 300,000 back orders, illustrating a serious customer service deficiency. "We were using order-point logic that was 20 years old," Knopp remembered. "To be successful in a customer-focused market we had to make a change. We had to move to time-phased replenishment planning."
Unlike replenishment systems of the past, time-phased replenishment relies on actual customer demand — not established stock levels — to drive manufacturing and distribution plans. At Bridgestone/Firestone, this was necessary to plan proactively for current and future orders, eliminating the old reactionary method of filling incoming orders as they were received. Today, planners can determine what quantities of raw materials to order, the most efficient way to plan production, and the best distribution plan to ensure on-time delivery. The result is delivery of the right products when and where the customer wants them.
To achieve this, Bridgestone/Firestone uses Manugistics, an integrated set of supply chain management applications from Manugistics Inc. (Rockville, Md.; http://www.manugistics.com), along with Bridgestone/Firestone's own master production scheduling system. Since the start of the project, Bridgestone/Firestone has seen marked results, including lower inventory levels, decreased transportation costs and fewer back orders.
The process has worked so well that even when the company added an additional line of products and doubled the number of stockkeeping units (SKUs) handled by the system, planning was completed without a hitch. Even though the organization was operating with almost half the number of personnel as before, customer demand was met effectively for all product lines. Using time-phased replenishment planning, the company provided more balanced service to its customers — with less than half the inventory it had carried in the past.
Because supply chain management software gives planners an accurate picture of the demand pipeline, Bridgestone/Firestone can now identify potential bottlenecks, change plans according to capacity and warehouse constraints, and eliminate problems before they occur. The system provides forward planning for throughput in a warehouse, and it helps ensure that personnel and space are available to meet proposed schedules. Using time-phased replenishment and plant scheduling, inventories and inventory costs have been cut in half.
Building on its past success, Bridgestone/Firestone is also using Manugistics software to forge stronger communication links with its suppliers. The company sends purchasing requirements overseas to its suppliers in Japan using electronic data interchange (EDI) to transfer purchasing data to the Manugistics system. Eliminating the need for paper-based orders, this communication has made the planning process easier and faster for companies at both ends of the transaction. The effort's success has led to an initiative to create similar EDI links with suppliers in South America and Europe.