With 100 years of experience, Nordco is a veteran of the railway industry. The company provides the products and services that rail-related industries need to stay on track, including substantial aftermarket spare parts and equipment production. However, like many smaller distributors, Nordco suffered from two common supply chain dilemmas.
- Balancing high service levels with inventory
The company needed to raise its service levels while maintaining or reducing its available inventory. To complicate matters, it wanted to increase the number of SKUs available to both its external customers and its internal production line without tying up an exorbitant amount of capital in slow-moving inventory.
- Lacking the right tools for the job
The company had no tool capable of dynamic forecasting, and the burden of accounting for fluctuations in demand fell to planners working with spreadsheets. The data from these sheets, which could be outdated by as much as six months, was then manually imported into an ERP system and used to drive ordering and stocking levels. These demand-centric blind spots limited Nordco’s ability to calculate the effects of supplier and delivery performance.
The company’s system and processes involved a cumbersome, time-consuming process which required a planner to compile a purchase order manually. This led to poor planner productivity. Also, the system did not track carrying costs, which would have helped planners evaluate purchases.
After considering a few different solutions, it became evident that ToolsGroup’s Service Optimizer 99+ (SO99+) could offer Nordco the most advantages. Its unique forecasting methodology and analytics capabilities gave the company the tools it needed to enhance its understanding of demand and revise its supply chain management. It provided a clear picture of the organization’s historical demand patterns and could easily be integrated into the company’s existing ERP system. Through a combination of demand forecasting, service planning, and replenishment planning, Nordco could recognize the deficiencies in its process, address those issues, and improve its inventory’s performance.
Planner Productivity Increases by 25%
With SO99’s forecasting methods, stock mix optimization, and replenishment planning in place, Nordco could start reaping the benefits. Planners now better understand how to stock different quantities of different SKUs to support their business, based on a more granular understanding of demand. They also gained the perspective required to decide which items had enough demand to stock and which should be discrete purchases. This data-based decision-making process replaced the former “we need it because we always need it” mentality and helped Nordco improve its first-time fill rate by 5%.
SO99+ also streamlined Nordco’s purchasing process and reduced costs. Instead of manually compiling purchase orders, planners now save time by depending on SO99+ to create proposals for them to review, approve and send to suppliers. Moreover, SO99+ tracks carrying costs and item costs to help planners decide the right amount to order and carry. Because of these improvements, Nordco reduced its purchasing costs and has increased planner productivity by 25%.
Furthermore, with this improved understanding of its supply chain, Nordco can better evaluate the impact of its external supplier and delivery performance and can work with its suppliers on lead time accuracy.
Now that it has the right tools, Nordco can be ready for anything coming down the line.
By Mary Vasile