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Juniper Networks is a $3.5bn provider of routers, enterprise networking equipment and data security systems. The Sunnyvale, Calif.-based technology manufacturer has more than 8,000 global customers with service level agreements (SLAs) that are as short as four hours. Juniper's network to support the SLAs includes one global distribution center, nine regional DCs and 250 parts depots.
Until 2006, Juniper's service parts management operation relied entirely on two Excel spreadsheets with nearly 6,000 rows of data to manage the allocation of parts throughout its network.
"The spreadsheets were a mile long, were labor-intensive and error-prone," says Steve Blaz, vice president, global service operations, for Juniper Networks.
When it came to placing an order, Blaz says he was never able to accurately compare the spreadsheet inventory with what was really in stock somewhere. Forecasts were done sporadically based on the number of customers and the time constraints for SLAs. When a new customer came on, the spare parts inventory was increased to meet the most likely requirements.
"We needed to manually track what we had in inventory and where it was," says Blaz. "We ended up putting inventory in places where we did not need the parts, and we short changed other locations where parts were needed. It was really bad methodology."
With an ever-growing list of new products to support and an expanding universe of customers all over the world, the company needed a better solution to remain a leader in the highly competitive networking equipment industry. After-sale service is among the most critical factors that potential customers consider when selecting a vendor because the customers' entire IT system often relies on the ability of the networking vendor to keep the equipment operating.
Blaz previously worked at another major network equipment manufacturer and had experience with several other service parts solutions, so he knew that maintaining its industry leader position required Juniper to implement a service parts solution that delivered the high service levels required to meet the increasing demands of its global customer base. Blaz looked at four service parts software applications and decided on Servigistics Service Parts Management solution, a module of the Servigistics Service Management suite.
Juniper Networks selected Servigistics because of its service expertise and track record in implementing solutions for leading companies around the world.
"We chose Servigistics because it offered the functionality that best fit our needs," says Blaz. "The company was eager to work with us, and its software applications were easily customizable by our staff."
The implementation started in mid-2006 and was in full use in early 2007. Juniper Networks achieved a positive ROI in less than three months following implementation.
"We are very pleased by the rapid time to value achieved through our implementation of the Servigistics Strategic Management solution," says Blaz. "The solution enables us to have the right part in the right stocking location at the right time, which allows us to minimize downtime for our customers while more effectively controlling our inventory investments."
Juniper is using the Servigistics solution to manage 40,000 distinct service parts across 250 depots around the globe. The company has been able to align its global service organization on a single service solution to successfully optimize its inventory and manage overall performance at all levels of the business. Blaz and his team create a global plan by dividing the network into theaters. The theaters use the allocation for their area of the world as needed from nine regional DCs and replenish from the global DC. All DCs are operated by UPS Supply Chain Services.
Demand planning is ongoing and done daily, so when a customer or contract comes, Juniper is ready the next day with the right number of spares nearby. The Servigistics system includes algorithms that determine where all spares need to be placed. If the parts are not in the right place, planners can reallocate inventory from depot to depot or resupply inventory from a DC. If no inventory is available for reallocation, the manufacturing department is notified to create new spares, or the repair department is notified that it needs to speed up repair of units waiting to be fixed.
"The Servigistics software providing this kind of data gives us a lot of flexibility," says Blaz. "We can procure a spare, repair it or move it from another location.
Juniper has integrated the Servigistics system with other supply chain-related applications, including call-tracking, contract management, warehouse fulfillment and order management. For example, the Servigistics software integrates with the UPS system to see when parts are consumed, so they can be replenished.
When a customer calls Juniper's technical assistance center or goes to the company web site, Servigistics automatically extracts data from these other systems and determines how many spares are available at the customer's location or at a nearby depot. The support engineer can also arrange to have a part shipped to a nearby depot and can inform the customer when a technician will be dispatched.
Using the Servigistics software as the engine, Blaz's team has developed a service availability tool to determine if new sites for additional depots or technical support are needed. Juniper knows immediately if a new customer with multiple locations can be supported with the existing depot network and technician coverage. The Servigistics system knows the location of the depots, the field engineers and all the parts, as well as the service requirements for each customer.
"The system tells us if we have adequate service available for the customers in that region or if we need more depots," says Blaz. "We are always pushing the limits of the system, and it is working out for us."
When Servigistics was first implemented, Blaz compared the results from the old spreadsheet process with reports from the new Servigistics software. He was immediately able to identify depots that had too much or two little inventory.
"We reallocated parts inventory based on utilization, demand planning and expected failure rates," says Blaz. "Rather than manufacture new parts where we were light, we could just redistribute our current inventory. That was a big and immediate gain."
This redistribution saved Juniper $3.5m within a few months of implementation and another million dollars six months later. Blaz says other immediate benefits include better asset utilization, better timeliness and better customer service overall.
"The service parts operation run through the Servigistics software has made a huge difference in being able to provide on-time delivery and meeting our SLA," says Blaz, who adds that there are ongoing savings as well, but they are harder to measure. "We are now making and deploying the parts correctly and avoiding buying parts we don't need. We don't really track those savings at this point because Servigistics has given us an entirely new way of operating."
Other measurable benefits include:
• reduced operating expenses 13 percent by reallocating spares
• 15 percent increase in material availability
• 27 percent improvement in on-time delivery across all service levels
• 40 percent reduction in customer dissatisfaction
• 10 percent increase in customer satisfaction.
By choosing the Servigistics solution, Juniper is now achieving its commitment to improving its already high level of customer service and delivering on the commitment it's made to customers in a cost-efficient manner.
"We have always maintained an intense focus on serving our customers to ensure that they derive strategic business value from their networks," says Blaz. "With the Servigistics solution, we are better equipped to insure that when our customers require assistance, Juniper Networks will be prepared and able to deliver the right service, in the right place, in a highly responsive manner."
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