Based on cost, resistors and capacitors have become consumables, making it inefficient to run traditional purchase order cycles for them. Flint’s Pareto solution helps buyers re-focus on high value, high risk lines Purchasers often spend 80 per cent of their time managing lines that carry 20 per cent of the value and therefore the profit. Flint believes that low cost component supply should be seamless, allowing a re-focus of resources on those lines that carry the majority of value and risk. The Pareto solution provides the basis for all Flint vendor managed inventory (VMI) services and can take between 70 and 80 per cent of MRP action volume away from the buyer.
The solution is to implement demand driven supply. Flint utilises two dimensional bar codes with a Bluetooth scanner to send replenishment triggers to a GPRS base station. These messages are forwarded via the Vodafone network to a Flint proprietary virtual private network (VPN). The demand orders are then automatically uploaded into Flints system, triggering shipment and bin replenishment.
There are a number of options available. Kan Ban / JIT solutions ship the correct quantity of inspected and labelled product to any location on site. Min / Max solutions are triggered when the bin reaches its minimum stock level and the quantity shipped brings it back to its maximum level. Alternatively, Flint can consign inventory to a stocking location. Invoicing occurs at the point the next demand trigger is activated. Consignment stocking solutions help reduce inventory carrying costs and improve cash to cash cycle times.
Whether manufacturing in-house in various locations or outsourcing to EMS providers, Pareto MultiSite allows customers to define the site of manufacture based upon production capacity rather than material availability. Driven by a single demand forecast, a central buffer inventory maintained at Flint can be called upon by a demand trigger from a Kan Ban bin at of the specified locations. This helps reduce the cost associated with managing multi-site manufacturing and increases build flexibility.
Proprietary supply chain planning software forms the backbone of all Flint’s demand driven supply solutions. Forecast management automatically uploads customer forecasts, using rules based alerts to give early sight of possible supply issues. Flexible scheduling allows users to sequester customer specific buffer stocks in line with an agreement, while parent level forecasting allows customers to explode parent level forecasts to drive planning and stocking at component level. Call off can later be made at component level in line with specific part demand.
A review of demand management and material logistics flow is critical to the successful implementation of a Pareto solution. A diagnostic study carried out by Flint’s provides analysis of existing processes, change proposals and cost benefits. The diagnostic proposal also provides the lead into a managed execution plan.
Once service has migrated to the Pareto solution, Flint carries out regular reviews as part of a formal quarterly business review (QBR) process. The QBR has been designed to facilitate continuous improvement, improved communication/collaboration and continuous cost reduction. QBRs evaluate agreed key performance indicators in line with the Pareto project.
According to Flint’s research, implementing a Pareto solution results in a number of benefits, including reduced inventory, a reduction in receiving and stocking effort, reduced purchasing effort and a reduction in the overall time invested in materials management.
UK sales manager for Flint Distribution, Vince Clark, concludes: Our customers tell us that the cost saving initiatives of the major groups have resulted in them de-emphasising the lower cost components in favour of the higher average unit priced products.
Flint’s Pareto solutions significantly reduce the complexity of processes used to manage the procurement and stocking of low cost, low risk components. We believe that the ability to successfully service these low value products in significant volumes will increasingly become one of the key decision points for our customers in their vendor selection process.