• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
    • Webinar Library
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » For Smiths Medical, Service Quality Is an Ever-Moving Goal

For Smiths Medical, Service Quality Is an Ever-Moving Goal

June 15, 2012
Robert J. Bowman, SupplyChainBrain

The words "continuous improvement" are so common to the world of business that it's easy to forget how hard the concept is to achieve.

Smiths Medical, headquartered in St. Paul, Minn., is a division of the London-based Smiths Group. It makes a variety of sophisticated medical devices and equipment for surgery, drug delivery and post-operative care. In a business where the stakes are so high, the company prides itself on top-notch customer service. Recently, however, Smiths decided that it just wasn't doing well enough.

The problem was one that comes with success. Smiths had experienced several years of dramatic improvements in line-fill rate. Then it "plateaued," according to director of global service management Cherelle Whitfield. In addition, like so many other businesses in a worsening economy, the company was becoming more conscious of its cash position. To ensure that it was getting the most out of its investment, Smiths sought to reduce unnecessary inventory - even while continuing to boost service levels.

The two goals often are in conflict with one another. But Smiths was determined to increase customer service "without throwing inventory at it," says Whitfield. It needed a new metric for assessing performance, in addition to the traditional ones of back-order value, line-fill rate and the ability to ship on time every day.

At a supply-chain seminar hosted by A.T. Kearney, Smiths was introduced to ToolsGroup, a provider of software for supply-chain planning and inventory optimization. The two companies had crossed paths earlier, but Smiths at the time was busy with a major implementation of enterprise resource planning (ERP) software, notes Martin Woodward, managing director of ToolsGroup in the United Kingdom. A couple of years later, the dust from that project had settled, and the time was right for a fresh initiative on the inventory-management and customer-service side.

One priority, says Whitfield, was a new means of determining the optimal level of safety stock. ToolsGroup helped Smiths to measure all the way down to the order-line level, with the aim of matching inventory with strict performance goals.

A Global Business

Making matters more difficult was the global nature of Smith's business. The medical-device market differs greatly from country to country, Whitfield notes, based on the nature of each locality's healthcare system. In addition, the company was dealing with multiple tiers of suppliers and manufacturing sites. Against that backdrop of challenges, "the main problem is getting the right stock deployed in the right place," says Woodward.

Often a new piece of software will require major business-process change. That wasn't the case with the ToolsGroup implementation. Most of the work, says Whitfield, consisted of getting the right data out of Smiths' system and into a format that could feed into the new application. ToolsGroup provided a dedicated individual to act as a consultant on getting the data cleansed and aligned.

As with any such implementation, "there was a lot of work on our side," says Whitfield. But the task was made somewhat easier by the fact that Smiths had previously withstood the global, multi-year implementation of new ERP software. Once the company got the go-ahead for the ToolsGroup app, it was able to access and cleanse the necessary data within a couple of months, using staff that also had full-time jobs in day-to-day management.

The ERP project put the Smiths organization on the road to globalization. It had already begun scrutinizing every policy - including metrics for inventory management - on a company-wide basis. At the same time, Smiths was benchmarking itself against other medical-device companies. "We looked to get into the top quartile in inventory turns," says Whitfield.

The project began with a pilot in May 2011, following the couple of months spent on assembling the data. Woodward says the company identified 1,100 items at random, then compared them with others from the same product family that were still being managed in the traditional way. The new system was up and running by September, and was being deployed to calculate safety-stock levels by December.

Phasing It In

The phased approach was crucial to the project's success. "You've got to be very careful about throwing those kind of curve balls [at the organization]," says Whitfield. In the early days of using the new system, Smiths would even allow for some buffer stock above what was determined by the ToolsGroup app to be the optimal level.

Order lines, demand volatility and inventory volume were all targets for analysis in phase one. Phase two added average supply delay into the calculation, for an even more accurate determination of stock levels. Already, though, Smiths could see that it had too much inventory on its highest-running codes and not enough on the more volatile ones. The ToolsGroup application allowed the company to redeploy items where they were really needed.

Phase three, yet to be implemented, will see Smiths engaging with its commercial groups for various geographic regions and product segments. It will be able to set service levels for those items that are "most effective for our business," says Whitfield. Smiths will likely undertake the third phase after the end of its fiscal year in July.

Early benefits have been encouraging. In the pilot, Smiths was able to track how well it had met performance targets for fill rates, lines out of stock, back orders, safety stock value and inventory levels, the last of which were significantly down. Line-fill rates didn't see quite the improvement that the company was hoping for, however, the result of shipping delays.

To address that problem, Smiths is adding a new metric, measuring whether a product was available for a particular order line. "Right now we're seeing things headed in the right direction," Whitfield says. "We've got to give it a bit more time."

In particular, the company is targeting selected service levels and inventory turns. It's monitoring progress through monthly meetings with ToolsGroup representatives.

In addition to rebalancing inventory, the new system has allowed for better supply forecasting, smoothing out Smiths' manufacturing cycles. Understocks can result in a sudden surge of demand for raw materials, notes Woodward, while overstocks can force an expensive plant to stand idle for a period of time. Both hazards are minimized through the ToolsGroup application.

Whitfield says the company will continue to seek improvements in service and inventory management through the system. At some point, it might apply the technology to its service and repair operations, "but we haven't begun that conversation."

ToolsGroup has proved to be "a true partner," says Whitfield. "It was their request to meet with us on a monthly basis. You definitely feel they own being a success as much as we do."

Resource Links:
Smiths Medical
ToolsGroup


Keywords: SC Planning & Optimization, Forecasting & Demand Planning, Customer Relationship Mgmt., Technology, Asset Management, Business Intelligence & Analytics, Business Process Management, Collaboration & Integration, Event Management, Network Design, Order Fulfillment & P.O. Mgmt., Product Lifecycle Management, Sales & Operations Planning, SC Finance & Revenue Mgmt., Supply Chain Visibility, Warehouse Management, Pharmaceutical/Bio-Tech, supply chain, supply chain management IT, inventory management, inventory management IT, inventory control, inventory management systems, logistics IT solutions, WMS warehouse management systems, Medical, ToolsGroup, Inventory Optimization, Medical Device Industry, Supply Chain Planning

RELATED CONTENT

RELATED VIDEOS

Transportation & Distribution Product Lifecycle Management Sales & Operations Planning Forecasting & Demand Planning Supply Chain Finance & Revenue Management Supply Chain Planning & Optimization Supply Chain Visibility Technology Order Fulfillment Warehouse Management Systems Pharmaceutical/Biotech
KEYWORDS Asset Management Business Intelligence & Analytics Business Process Management Collaboration & Integration Customer Relationship Mgmt. Event Management Forecasting & Demand Planning inventory control Inventory Management inventory management IT inventory management systems Inventory Optimization logistics IT solutions Medical Medical Device Industry Network Design order fulfillment Order Fulfillment & P.O. Mgmt. Pharmaceutical/Bio-Tech Pharmaceutical/Biotech Product Lifecycle Management Sales & Operations Planning SC Finance & Revenue Management SC Finance & Revenue Mgmt. SC Planning & Optimization supply chain supply chain management IT Supply Chain Planning Supply Chain Visibility Technology ToolsGroup Transportation & Distribution Warehouse Management Warehouse Management Systems WMS warehouse management systems
  • Related Articles

    UPS Enhances Field Stocking Locations for Medical Device Makers

    Supplier Management Is More Critical Than Ever

    Managing Demand for Critical Bio-medical Parts

  • Related Directories

    SnapFulfil

Robert J. Bowman, SupplyChainBrain

Watch: Modernizing EDI to Scale Freight Procurement

More from this author

Subscribe to our Daily Newsletter!

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • DOCUMENTS BEARING THE INSIGNIA OF US CUSTOMS AND BORDER PROTECTION LIE ON A TABLE

    New CBP Regs Call for Greater Diligence by Brokers in Reporting Security Breaches

    Freight Forwarding/Customs Brokerage
  • A WORKER IN A WAREHOUSE, SUPERIMPOSED WITH GRAPHICS SHOWING SUPPLY NETWORK

    Enabling Intelligent Visibility With Supply Chain Analytics

    Data Management (Big Data/IoT/Blockchain)
  • GSCMS-Promo.png

    Watch: Introducing the Global Supply Chain Marketing Summit

    Education & Professional Development
  • A HAND TURNS A LARGE, LIGHTED DIAL WITH THE WORD RISK ON IT iStock-NicoElNino-1364371014.jpg

    Measuring KPIs and KRIs for Comprehensive Supplier Performance Management

    Technology
  • DEEPLY CRACKED EARTH UNDER A BLUE CLOUDY SKY

    Why Maritime Supply Chains Must Adapt to Sustainability Regulations

    Ocean Transportation

Digital Edition

Scb nov 2022 sm

2022 Supply Chain Innovator of the Year

VIEW THE LATEST ISSUE

Case Studies

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

  • Expanding Apparel Brand Scales Seamlessly with E-Commerce Technology

  • How a Global LSP Scaled its Security Program and Won More Business

Visit Our Sponsors

Orderful Yang Ming Alithya
Barcoding Blue Yonder BNSF Logistics
CoEnterprise Data Capture Deposco
E2open GAINSystems Generix
Geodis GEP GreyOrange
Here Honeywell Intelligrated IFM
Infor Inmar Keelvar
Kinaxis Korber Lean Solutions Group 2H
Liberty SBF Locus Robotics Logility
LogistiVIEW Lucas Systems MCA Connect
MPO Nvidia Old Dominion
OpenText ORTEC Overhaul
Parsyl PMMI QIMA
Redwood Logistics Ryder E-commerce by Whiplash Saddle Creek Logistics
Schneider Dedicated Setlog Holding AG Ship4WD
Shipwell Tecsys TGW Systems
Thomson Reuters Tive Trailer Bridge
Vecna Robotics Verity
Verusen
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing