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It's good to have a product line that's in demand. It might be even better to know just how much demand there is for what you sell. That way, efficiencies can be built into your planning process, redundancy and excess inventory can be eliminated, customer satisfaction can be boosted - and, yes, a lot of money can be saved.
Daniel Schildge knows something about selling products that people want. He's the president of CRP Industries, a supplier of automotive and industrial parts, based in Cranbury, N.J. The largest division of CRP handles millions of automotive parts each year in the NAFTA market, including timing belts and kits, serpentine belts, coolant hoses, air conditioning parts, anti-vibration and suspension parts, wheel bearings, gaskets, head bolts and automotive technical fluids.
Some of the brand names in the CRP product line include ContiTech automotive and industrial belts, Rein Automotive parts, Pentosin technical fluids, AJUSA gaskets and head bolts, Reinflex high-pressure thermoplastic hose, TUDERTECHNICA rigid mandrel hose, and Perske high-speed motors.
From its U.S. East Coast headquarters, CRP supports and services a network of wholesale and retail outlets for the products it carries. In addition to the N.J. office, it operates facilities and warehouses in Fremont, California; Mississauga, Ontario; and Puebla, Mexico.
Many of the parts that CRP sells are destined for the original equipment manufacturers or for distributors and retailers of parts for Volkswagen, Audi, BMW, and Mercedes-Benz applications. Demand has been so great in the last several years, Schildge says, that business has virtually doubled. Given that CRP didn't have an efficient demand signal, it might be said that headaches - at least for company planners - probably increased as well.
Because most of the products it sells are made in Europe, it typically takes three months before anything ordered is received into inventory, says Schildge. Given that the company handles about 19,000 SKUs, an inefficient interface between purchasing and planning is no help. CRP found that the purchasing module in its ERP system simply wasn't up to the task.
In 2007, CRP began working with Blue Ridge, an inventory management and supply chain solutions provider based in Marietta, Ga. Though initially brought on as a consultant on process improvements, Blue Ridge became a full-fledged partner two years later when CRP implemented Blue Ridge's Clarity SaaS solution.
CRP's business falls into three buckets, says Greg White, CEO of Blue Ridge: it imports products for car manufacturers, it supplies parts to a NAFTA-wide network of warehouse distributors and major chains, and it assembles repair kits, such as timing belt kits. "They needed a good demand signal to help them stock the right goods, the component parts to support production at the OEMs and to plan what was needed to import in order to build the kits that support their sales."
The challenge? As White sees it, those three separate businesses create three different types of demand. "And there was lumpiness in supporting them," he says. Supplying the OEMs might be the least problematic. It was fairly clear when new models went into production and what parts or modifications were mandated. Supplying retailers and distributors was another story. Demand was intermittent there, and it was difficult to know when there might be a run on a given item. Finally, the assembly operation for the timing kits complicated things, White says. "The package comprises timing belts, a gear set or pulley. They sell the parts independently if someone wants just that or the whole set. They found that there is a marketplace for those as a kit, however. When a repair shop wants to make a repair, they often replace all of those parts. So CRP brings them in and has their production facility in Cranbury assemble them into complete kits."
In fact, mechanics might order one part or they might order the entire kit. Without an accurate demand signal, CRP might end up cannibalizing kits for individual parts or having excess inventory. "Things were complicated," White says.
Specialized oils and fluids for German vehicles are a big item for CRP, but they were a major problem for the company's ERP system. In some cases, the fluids are imported in large containers, then are bottled and labeled for sale domestically. The ERP system couldn't efficiently "translate" orders for the fluids or for any of the three types of demand given the constraints on CRP's supply chain, White says.
Schildge says the relationship with Blue Ridge was a bit rocky in the beginning, but eventually became smooth enough that Blue Ridge now manages CRP's forecasting. White says a demand forecast is based on customer history, but CRP is also supplied with predictive signals that translate into a production schedule. "We can say here's what your demand from your customer will be and this is what you need to produce, either with the kits or the fluids or whatever," says White.
Were the two partners to start over, Schildge says, he would work to ensure that CRP was capable of handling the integration. "I would make more effort on the integration plan. At the start, we made some compromises. On both sides we might make some changes. Implementing their system was complicated because we didn't have the IT capability that we have today."
Nevertheless, CRP has benefited without a doubt, Schildge says. "I would say the system has vastly improved the user interface. Our people are looking at many more exceptions, which means the system helps them narrow down the things that they need to be focusing on."
CRP's business has "pretty much close to doubled" since the partnership began. "We've been steadily improving fill rates and our service levels are up," Schildge says. "We've also had noticeable improvements in our inventory turns. It's hard to do both of those at the same time, and we've been able to do that."
Keywords: supply chain management IT, inventory management IT, value chain IT, warehouse management systems, wms warehouse management systems, supply chain solutions
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