Postal Service Uses Supply Chain Planning
For Forecasting And Replenishment

The U.S. Postal Service Material Distribution Center manages supplies for 36,000 post offices across the country, including the critical repair parts that keep its automated mail-sorting machines humming.

"When a machine needs repair at one of our facilities, we have to be able to respond to our customer and get the repair part to them as quickly as possible," says Don Stewart, systems specialist senior.

Orders for parts are transmitted electronically to Topeka, Kan., where the center — along with three others in the U.S. — turns them around quickly to ensure continuous customer service at local offices.

"We measure ourselves in customer service levels and inventory turns just like any other warehousing and inventory management organization," Stewart says. "Our goal is to provide a very high level of service to our customers while watching our inventory levels, and to do that we need to be able to forecast the materials we need and place orders with our vendors to get those materials when our customers need them."

The Postal Service turned to LPA Software Inc. (Fairport, N.Y.) for supply chain planning software that would allow it to forecast demand, plan inventory and allocate materials across the 40,000 different items in its inventory supplied by more than 8,000 vendors.

"The LPA system provides us with 100 percent of our requirements in forecasting, planning and replenishment," Stewart says. "Everything our planners need to see is now available to them in a single screen on their workstation."

The software also performs "reverse logistics," integrating repairable parts into the supply chain planning process. "Some of the parts we buy and provide to our customers are very expensive," Stewart says. "The system's reverse logistics capability provides us with repairable order processing, factoring in on-hand quantities of both repairable parts as well as new-build inventory. This allows us to repair parts at probably 15-20 percent of the cost of buying them new, saving us a great deal of money."

The Postal Service maintains its central warehouse for material distribution in Topeka; other major warehouses are located in Indianapolis, South River, N.J. and San Leandro, Calif. The distribution centers stock a wide variety of supplies for post offices across the country, everything from pencils, papers and forms to repair parts for mail-sorting equipment.

"We need to turn orders around on a dime," Stewart says. "We need to get orders in, get them processed, and get them out the door as quickly as possible. We also need extensive management reporting capabilities, so our managers can measure how effective we were. LPA was the only software we saw that offered the critical functionality we were looking for."

"With the previous system, users would have to wait overnight to replan an item," Stewart says. "In LPA this activity takes place on-line, in real time. The system is extremely responsive."

Data is passed from a customized enterprise system — which includes applications such as order entry, warehousing and shipping — to LPA on a weekly basis. The information includes balance on-hand for all items, current on-order status, and other item master information.

"Inventory managers come in each Monday morning and begin looking at the messages within the system for their most important items," Stewart says. "The managers then react to those messages, such as forecast changes or the need to increase or decrease an order."

When they determine they want to place a buy for an item or initiate a repair, they click on the order list button and get a display of what the system has recommended. They then either modify the recommendation or accept it as is and approve the orders.

Order information is passed back to the host on a nightly basis. That system creates a procurement request which it sends to the procurement organization to initiate the bid-and-buy process.

The LPA system also alerts inventory managers to problems with their forecasts and lets them try different forecasting methods.

"If the system is telling them they need to change their forecast method — based on the demand data that has been passed into the system — they can try several different forecast methods to determine which one is best for a particular item," Stewart says.

The system is flexible enough to let the Postal Service handle a wide variety of items, from those costing hundredths of a cent on a per-unit basis to others priced as high as $35,000.

That's enabled a major change in the way the Postal Service conducts its business.

"We were really more of a buying organization, and did very little inventory management," Stewart says. "Now we're focused more on inventory management, using the software — along with some APICS training tools to improve our operations."

Kodak Increases Warehouse Efficiency

For Eastman Kodak Company, the keys to installing a successful warehouse management system are vision creation, teamwork and partnership. Careful forethought and planning over the course of a 22-month project have given Kodak a system today that has operated smoothly for nearly four years.

Encompassing over one million square feet, the Windsor site is part of one of only two Kodak manufacturing facilities in the United States. The finishing warehouse receives and stores sensitized film rolls and other raw materials such as boxes, bags, cores and labels, 24 hours a day, seven days a week. When the manufacturing departments request material to meet production schedules, the finishing warehouse personnel pick and deliver it to the appropriate manufacturing area.

Kodak chose a warehouse management system from Uniteq Application Systems Inc., and followed these steps in its successful implementation: vision creation, project definition and benefits evaluation.


Vision creation
During the envision process, the company asked: How do we operate the warehouse today? How do we want to operate the warehouse tomorrow?

As the project leader, Ed Hurtubis asked the users — the people responsible for managing and performing the warehouse operations — what they needed. "This was also a good time to strive for total agreement on any conflicting demands among the various affected parties," says Hurtubis.

During this process, Kodak identified many key system requirements. These included the need for a system that was turnkey, user friendly and paperless. Additional requirements included a single point of contact for system component vendors, the ability to outsource system maintenance, capabilities that allowed users to change system operations without information services (IS) support, widespread availability, and eliminating current transactions for higher efficiency.


Project definition
During the project definition phase, a project team was organized to develop an implementation plan to meet the defined objectives. The team consisted of three members: a representative from the user community, one from information systems and one from facilities.

Working with the purchasing department, the team identified potential warehouse management system suppliers and then set out to collect information on those suppliers. In March 1992, Kodak chose Uniteq as its implementation partner. In addition to supplying software, Uniteq provided the system integration expertise and served as a single point of contact with all the hardware and software vendors.

"Another key factor in our choosing Uniteq was its flexibility in creating a system that would meet our needs," says Hurtubis. "Some of the vendors that we evaluated would have required that we redo the nomenclature we used in our warehouse operations. Uniteq enabled us to incorporate the language we were already using in the program they designed for us."

Uniteq had to survey the warehouse to determine the type and number of various hardware components required to deliver the desired system response time and operational efficiency improvement. This and other system design issues, including a full description of system features, performance metrics and the graphical user interface panels, were documented in the design document.

Part of Kodak-Uniteq's plan was establishing a radio frequency system to eliminate the need for forklift operators to transverse the large warehouse area to pick up work orders. A facility analysis by the radio frequency equipment vendor was scheduled and performed. The opportunity enabled the vendor to survey the site and to recommend the number and placement of antennas needed to guarantee complete coverage.

The project team also designed and documented a set of factory acceptance tests which were conducted at the vendor's site so as not to be intrusive to ongoing warehouse operations. The purpose of these tests was to ensure the warehousing system behaved consistently with the design specifications and to avoid surprises. By the time all of the tests were completed, the system had all the features documented, including the integration of all servers and client stations, real-time radio frequency and bar code devices, data input/output gateways and user interface.


Benefits evaluation
According to Hurtubis, payback benefits from the system included increased equipment utilization and personnel productivity; improved inventory turns, or reduced amount of inventory needed to support a certain production level; and improved quality of warehouse operation by cutting down the number of errors and ensuring Just-in-Time performance. In addition, the warehouse management system installed at Kodak Colorado Division allowed the reduction of resources by 25 percent and the reduction of inventory on hand by one day.

"Although our division has experienced 5 to 10 percent growth each year since we implemented the system, we haven't had to add any additional resources to maintain a high quality of production," says Hurtubis. "We're very happy with the system and its reliability."

Copyright © 2020 by APICS — The Educational Society for Resource Management. All rights reserved.

Web Site © Copyright 2020 by Lionheart Publishing, Inc.
All rights reserved.


Lionheart Publishing, Inc.
2555 Cumberland Parkway, Suite 299, Atlanta, GA 30339 USA
Phone: +44 23 8110 3411 | br> E-mail:
Web: www.lionheartpub.com


Web Design by Premier Web Designs
E-mail: [email protected]