Executive Briefings

SPECIAL ISSUE: GLOBAL SUPPLY CHAIN PARTNERSHIPS

Miele Inc.: Appliance Maker Bridges the Gap In Its Global Supply Chain

Time it takes for the U.S. division of Miele to get product from its manufacturing arm in Germany: 70 days. Time it takes for Miele's American dealers to have their orders filled: one day. To avoid crippling stockouts, something has to fill that gap.

That something is usually inventory. But Miele, a maker of high-end appliances, has found another solution. An order management system from International Business Systems (IBS) has streamlined the manner in which U.S. orders flow to the plants in Germany, lessening the need for safety stock. And it has opened the door to use of the internet for even faster processing of dealer orders.

Miele's high-quality products include cooktops, ovens, dishwashers and vacuum cleaners. Most are for commercial or industrial use. The parent, Miele & Cie., is based in Gutersloh, Germany, with a U.S. sales subsidiary, operating as Miele Inc., in Princeton, N.J. Its distribution setup consists of four facilities - two in New Jersey, one in Southern California, and one in Florida. Miele sells mostly through a network of some 1,500 independent dealers, although its products can also be found at Home Depot.

In 1996, Miele decided it was time to replace an antiquated order-management system. It needed something that would run the gamut of its distribution operation - finance, sales and inventory control. In particular, the company wanted to ensure product availability while keeping inventories low. For the most part, Miele supplies the U.S. on a build-to-order basis, turning out product in Germany geared to American electrical standards.

After reviewing several candidates, Miele settled on IBS, the Swedish company with a U.S. division in Folsom, Calif. The vendor's complex ASW software took about nine months to implement fully, with more than 200 tables to be set up and customized for Miele, according to Ken Saunders, IBS project manager.

The system handles purchasing, sales order entry, shipping, inventory control, and invoicing. Orders are usually taken over the phone, then processed and priced, with the dealer given an available delivery date. Often that's the same day. In addition, the system relays to the warehouse a pick list, which becomes a formal packing list upon shipment.

On the purchasing side, ASW aids in forecasting, giving the user purchase suggestions which can be edited and turned into purchase orders. When product hits the door, the system prints out a reception verification. It also designates a location within the warehouse for putaway.

Of special note is the issuance of real-time data on inventory and product availability. When levels are low, a warning appears at the bottom of the screen, along with information about when the item can be had, and how long it will take to reach the warehouse. That feature helps Miele to keep product on hand, despite the long lead times required to obtain it from Germany.

The switch from manual to automated forecasting has helped to bring down inventory levels, at a time when Miele is experiencing record sales growth of 30 to 40 percent a year. According to information technology manager Fran Miller, the company slashed inventories by 15 percent in the first year of deploying the ASW software. That number has since grown to 30 percent. In the process, inventory on hand has been cut from three months to two. Because of the continuing need to source product from Germany, that's about as low as it can go, Miller says.

Miele's next step is to use ASW as the basis for setting up a web site for dealer orders. An ASW upgrade known as Internet Connection e2 is being integrated into the customer's ordering, logistics and information systems. In addition to automating the order process, which will no longer be limited to business hours or the need to reach an order-taker by phone, the new software will provide real-time information on product availability and the status of dealer accounts.

That should further speed up the order cycle for dealers - and put more pressure on Miele to have product on hand to meet those orders. Miller stresses that the web site will be for dealers only, and that Miele has no plans to begin selling direct to consumers over the internet.

Miller is also looking forward to the switch from "green screens" to a graphical user interface (GUI) environment, making it even easier for dealers and order-takers to navigate the system. That should result in additional productivity gains, he says.

Time it takes for the U.S. division of Miele to get product from its manufacturing arm in Germany: 70 days. Time it takes for Miele's American dealers to have their orders filled: one day. To avoid crippling stockouts, something has to fill that gap.

That something is usually inventory. But Miele, a maker of high-end appliances, has found another solution. An order management system from International Business Systems (IBS) has streamlined the manner in which U.S. orders flow to the plants in Germany, lessening the need for safety stock. And it has opened the door to use of the internet for even faster processing of dealer orders.

Miele's high-quality products include cooktops, ovens, dishwashers and vacuum cleaners. Most are for commercial or industrial use. The parent, Miele & Cie., is based in Gutersloh, Germany, with a U.S. sales subsidiary, operating as Miele Inc., in Princeton, N.J. Its distribution setup consists of four facilities - two in New Jersey, one in Southern California, and one in Florida. Miele sells mostly through a network of some 1,500 independent dealers, although its products can also be found at Home Depot.

In 1996, Miele decided it was time to replace an antiquated order-management system. It needed something that would run the gamut of its distribution operation - finance, sales and inventory control. In particular, the company wanted to ensure product availability while keeping inventories low. For the most part, Miele supplies the U.S. on a build-to-order basis, turning out product in Germany geared to American electrical standards.

After reviewing several candidates, Miele settled on IBS, the Swedish company with a U.S. division in Folsom, Calif. The vendor's complex ASW software took about nine months to implement fully, with more than 200 tables to be set up and customized for Miele, according to Ken Saunders, IBS project manager.

The system handles purchasing, sales order entry, shipping, inventory control, and invoicing. Orders are usually taken over the phone, then processed and priced, with the dealer given an available delivery date. Often that's the same day. In addition, the system relays to the warehouse a pick list, which becomes a formal packing list upon shipment.

On the purchasing side, ASW aids in forecasting, giving the user purchase suggestions which can be edited and turned into purchase orders. When product hits the door, the system prints out a reception verification. It also designates a location within the warehouse for putaway.

Of special note is the issuance of real-time data on inventory and product availability. When levels are low, a warning appears at the bottom of the screen, along with information about when the item can be had, and how long it will take to reach the warehouse. That feature helps Miele to keep product on hand, despite the long lead times required to obtain it from Germany.

The switch from manual to automated forecasting has helped to bring down inventory levels, at a time when Miele is experiencing record sales growth of 30 to 40 percent a year. According to information technology manager Fran Miller, the company slashed inventories by 15 percent in the first year of deploying the ASW software. That number has since grown to 30 percent. In the process, inventory on hand has been cut from three months to two. Because of the continuing need to source product from Germany, that's about as low as it can go, Miller says.

Miele's next step is to use ASW as the basis for setting up a web site for dealer orders. An ASW upgrade known as Internet Connection e2 is being integrated into the customer's ordering, logistics and information systems. In addition to automating the order process, which will no longer be limited to business hours or the need to reach an order-taker by phone, the new software will provide real-time information on product availability and the status of dealer accounts.

That should further speed up the order cycle for dealers - and put more pressure on Miele to have product on hand to meet those orders. Miller stresses that the web site will be for dealers only, and that Miele has no plans to begin selling direct to consumers over the internet.

Miller is also looking forward to the switch from "green screens" to a graphical user interface (GUI) environment, making it even easier for dealers and order-takers to navigate the system. That should result in additional productivity gains, he says.