|Written by Amir Schragenheim|
Omron Healthcare, established in Japan in 1948 as part of the Omron Corporation, is a leading manufacturer of medical equipment for health monitoring and therapy, with current annual sales of US $825 million. The company implemented a Toyota production system with positive results in 2006, however, distributors of Omron Healthcare faced conflicts between holding too much inventory in order to protect sales and holding too little in order to control costs, with stock keeping units (SKUs) fluctuating between both in short amounts of time.
Omron Healthcare chose Symphony, a software tool that helps to synchronise the supply chain, by Inherent Simplicity. Since the implementation, the company has reduced its inventory by more than 50 per cent while substantially increasing the availability of its products.
Symphony is an add-on tool that works with the organisational enterprise resource planning system and uses Microsoft SQL Server as the database for its operation. It enables organisations to manage their production and distribution using the concept of a pull distribution system, as developed by the theory of constraints (TOC) management methodology. One of the key principles of the methodology is to display the priorities based on consumption of the stocks across the supply chain. Symphony manages each SKU per location separately in a way that closely matches the supply with the demand. The implementation included a proof of concept (POC) phase in which some SKUs were managed using a dynamic buffer management approach, which recommends a change in the inventory level based on the combined impact of demand and supply. The chosen client was one of the largest drug chain stores in Japan. While comparing the results in the POC phase between January and February 2011 to the pre-POC phase between November 2010 and January 2011, Omron Healthcare saw a 56 per cent drop in the average stock without experiencing any shortages as witnessed previously. Furthermore, there was an increase in sales due to the higher availability achieved from production. Due to its success, Omron Healthcare managed the uncertainty of material availability, generated by the earthquake in March 2011, through expanding the POC to the whole range of products.
Solution: Supply chain management
Benefits: Better stock level management, increased sales, visibility of supply chain
Technologies: Inherent Simplicity Symphony, Microsoft SQL Server
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