Lower stock levels, higher delivery readiness

Who leaves their money lying around in storage? No one, that’s clear. While IT-supported quantity optimization has long been common and established for series material, IT often struggles with non-series material. There are no suitable parameters for forecasting demand behavior and thus the level of inventory. Abels & Kemmner has developed a solution to this problem with its DISKOVER software.

Stabilus GmbH, Koblenz, was looking for a new solution to optimize inventory management based on the SAP system used for non-series material – i.e. purchased parts that are not or only indirectly related to production at a series manufacturer, such as office and general consumables, maintenance material and tools. After a three-month test phase, Stabilus decided to use DISKOVER 4.1 from Abels & Kemmner in Herzogenrath. DISKOVER is the abbreviation for: DISposition with the help of KOnfidence areas, taking into account the actual stock issue distribution.

Investigation of demand distributions

Demand is rarely normally distributed and is therefore often difficult to determine using traditional forecasting methods
Demand is rarely normally distributed and is therefore often difficult to determine using traditional forecasting methods

Stabilus GmbH in Koblenz is a manufacturer of systems for hydraulic damping and adjustment of flaps, doors and seats in numerous industrial applications. A large area of application for the products is in the automotive industry, which has had a significant influence on the handling processes in the area of procurement and production of series materials. The area of non-series materials is structured quite differently. They are subject to natural fluctuation and cannot be optimally planned using standard parameters, which generally provide for a normally distributed outflow of stock. Why? In practice, the proportion of normal distributions in outgoing stock is only around 5%. However, a relatively large proportion of the distributions (approx. 25 %) cannot be assigned to any theoretical distribution type at all. Stabilus was looking for a solution in SAP for the scheduling of non-serial items that could not be assigned to a theoretical distribution type and found it in DISKOVER .

In conjunction with the leading SAP system, Diskover determines the optimum scheduling procedures and parameters. The scheduling system is characterized above all by its methodical approach in two successive stages:

First, the parts are arranged in an article structure according to requirements and consumption patterns. For each item class, the optimum scheduling procedures and parameters are then determined with regard to stock levels and the required readiness to deliver. These parameters are then transferred to the leading host system (in this case SAP) or used directly in DISKOVER to determine the order proposals for parts procurement. Item-specific basic requirements and safety stocks are determined taking into account a specified target delivery readiness level and the actual distribution of stock issues and replenishment fluctuations in the company.

Uwe Mollenhauer, Head of International Logistics, Production Control and Material Scheduling (SILS) at Stabilus: “DISKOVER enables us to optimize stocks quite elegantly at the level of agreed delivery readiness for the large number of our non-series materials.”

The Diskover 4.1 scheduling system is an operational management system for optimizing the supply chain from purchasing to delivery. It is characterized by extensive selection mechanisms for daily planning as well as by its portfolio analysis and simulation functions. In addition, the program also offers distribution-free scheduling procedures. It can be run as an add-on tool under SAP and all common ERP, PPS and WW systems. The use of Diskover is generally worthwhile from an average inventory value of approx. 2.5 to 5 million euros.

Track record

By using Diskover, Abels & Kemmner has so far achieved two contradictory goals for over 40 companies: They increase the level of delivery readiness and reduce stock levels at the same time. 82% of the companies were able to save at least 15%, 32% were even able to save more than 25%. The largest cluster with 43% of companies saved between 20 and 25%. However, it should be emphasized that DISKOVER as software alone is not a panacea. Rather, it is important that the know-how about scheduling procedures is applied in day-to-day operations. This always requires initial data preparation and detailed analysis of the product portfolio as well as intensive training of the dispatchers. In addition, operational practice should be reviewed at regular intervals even after the introduction of DISKOVER.

One example from the textile industry is the corsetry and swimwear specialist Anita Dr. Helbig GmbH, known for the perfect fit of its products. The company has worked with Abels & Kemmner to find the perfect logistical fit. A very conservative overstocking analysis already revealed a stock reduction potential of 19%. The actual savings potential amounted to 26.3% according to targeted inventory simulations. The consulting project thus paid for itself in just four months at an inventory cost rate of 15%.

DISKOVER at Montblanc: Montblanc Simplo GmbH, Hamburg, has been using the Diskover 4.1 add-on tool, which is linked to the SAP R/3 SOP function, for more than a year to plan the central sales planning of around 1,000 product groups and 3,000 articles. Since then, demand peaks and supply bottlenecks can be identified earlier despite the wide range of variants and seasonal business, allowing them to be reduced in good time. JiT production and a Kanban system, which is linked to SAP, were also introduced to streamline the warehouse. This restructuring will reduce the inventory value by 48%, almost halving it. A key factor here is the reduction in finished product inventories, in which the added value must be factored in. “With DISKOVER, we have found a practical economic tool that supports our SAP world very well,” says Burkard J. Kiesel, Director of Technology at Montblanc-Simplo.

The medium-sized specialist wholesaler for kitchen accessories, Alfred Rudolph GmbH & Co. KG from Halver, works with the FAMAC ERP system from Bäurer. Initially, DISKOVER was used offline to determine the optimization potential in an introductory project. Since the dispatchers themselves have been able to make full use of DISKOVER’s possibilities in their day-to-day business, the inventory situation and turnover have improved significantly. The inventory range as a ratio of inventory to consumption has almost halved from 1.93 to 1.07 months. This corresponds to a virtual doubling of stock turnover.

UK-based Tunstall Group Ltd, a manufacturer of electronic systems for the care of disabled, sick and elderly people in their homes, works with BAAN. Using DISKOVER, it was found that finished goods inventories could be reduced by 45%, with significantly improved delivery reliability of 98%.

IT facts

DISKOVER runs as a client on all Windows platforms. The central database server (e.g. Oracle, MS-SQL) communicates with the leading ERP system via a standardized interface. The client and server must be configured depending on the data volume: The minimum requirements for the system are an Intel Pentium 111 processor, 64 MB RAM, 10 MB hard disk space for the client and 200 MB free disk space on the server. The server is configured as a Windows NT/2000 server.

Abels & Kemmner

Abels & Kemmner GmbH was founded in 1993 by the engineers and economists Dr. Helmut Abels and Dr. Götz-Andreas Kemmner.
One of the company’s focal points is the streamlining of value chains (supply chain optimization).
The second focus is on restructuring and profit improvement projects. Here, continuation forecasts as well as restructuring and downsizing concepts are developed and implemented in the companies. The company has made a name for itself in crisis and turnaround management through the successful restructuring of medium-sized companies.

Dr. Bernd Reineke

Dr. Bernd Reineke

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