Product category:
Capacitors
News Release from: TTI Europe | Subject: Electronic inventory management
Edited by the Electronicstalk Editorial
Team on 30 November 2006
Logistics system reduces high inventory
EN ElectronicNetwork uses TTI's AIRS electronic procurement system for more than 2600 parts in all seven of its manufacturing facilities in Germany.
Reducing warehouse cost - including building cost, fixed capital, personnel cost as well as insurance premiums for inventory and facilities - is top of the wish list for many company procurement departments and management teams They search for cost saving opportunities in many areas, specifically in inventory management
This article was originally published on Electronicstalk on 18 Oct 2001 at 8.00am (UK)
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One customer of specialised distributor TTI Europe was faced with the challenge of reducing its high inventory.
EN ElectronicNetwork Group - one of Europe's leading EMS suppliers - had an elaborate procurement procedure.
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The company had seven manufacturing facilities in Germany that were using different PPC software systems to purchase electronic components.
Markus Dillmann, VP Procurement at EN ElectronicNetwork Group, saw this as an opportunity to reorganise the company's procurement procedures.
With an objective of quickly reducing inventory and associated fixed capital, Dillmann contacted TTI.
"We had to do something, especially to reduce our cost".
"TTI is a preferred strategic partner for purchasing passive electromechanical components and connectors", explained Dillmann.
Frank Fleck, Strategic Program Manager with TTI, continued: "Due to our electronic logistics system, AIRS (Advanced Inventory Reservation System), we were immediately able to help EN ElectronicNetwork with their challenge and optimise their purchasing procedures".
The electronic inventory management and reservation system, AIRS, was developed by TTI Europe's parent company, TTI in the USA, specifically for the logistical requirements of managing passive and electromechanical components.
In Europe, the system already handles order volumes of more than a third of the total turnover.
Across all TTI customers currently using this electronic logistics system, AIRS manages orders for a total of 35,000 part numbers.
AIRS works with forecast demands that the customer sends to TTI at regular intervals, either through EDI (electronic data interchange) or as an e-mail attachment in various file formats.
Based on these forecasts, the logistics system calculates the required quantities of a component and pre-allocates the stock.
TTI's purchasing department checks the forecast data managed by the logistics system and forwards the orders to the supplier electronically.
The main objective is to get an idea of the demand trend.
This allows optimisation of the pre-allocated components and allows adjustments to be made according to the customer's requirements.
AIRS reserves each specific customer's stock for the subsequent weeks' production in TTI's warehouse.
The goods are then dispatched in a bundled shipment to the customer directly when needed.
"Via Internet access, we can trace the components reserved for us and also check whether additional quantities are available in TTI's warehouse", adds Thomas Schubert, Coach Procurement and Logistics with EN ElectronicNetwork Heiligenhaus.
If EN ElectronicNetwork requires a larger than planned for quantity of a certain item, the company can see immediately whether TTI can deliver the additional amount at short notice.
In addition, EN ElectronicNetwork and TTI work closely together to synchronise the components across all production facilities.
The internal system allows verification of the quantities of specific items in each facility and therefore makes exchanges of the goods between the various locations very simple.
"For EN ElectronicNetwork, this means increased inventory management flexibility because minimum inventory levels can be reduced, resulting in lower fixed capital", explains Frank Fleck.
EN ElectronicNetwork can easily and efficiently process weekly shipments of components for the entire week's production at each location.
The system reduces the workload when receiving goods.
"Using an electronic logistics system that provides us with the requisite amount of goods in a timely fashion has not only allowed us to eliminate material management but also dramatically reduced the amount of storage space required because we now only hold minimum amounts of inventory", says Markus Dillmann.
As TTI is specialised in the distribution of passive components, connectors and electromechanical components, the company can focus on the individualities of these products.
This means that the logistics program AIRS is fully tailored to the above mentioned range of parts and their characteristics.
These components are usually ordered in large quantities, but at low unit prices.
"It therefore makes sense to co-ordinate optimised packages with our customers and to secure component continuity with an intelligent logistics system", says Frank Fleck.
"This also has a direct positive effect on production setup costs", adds Fleck.
Due to their low individual value, customers dealing with passive and electromechanical components usually want to avoid high administrative and processing efforts.
It is therefore advisable to automate order processing, to bundle shipments and to optimise information processes with regards to sudden schedule changes.
One of AIRS' major benefits lies in the fact that it relieves customers, such as EN ElectronicNetwork, from routine tasks that form part of purchasing standard components.
The only thing left for the customer to do is to transmit the forecast for the required items to TTI - everything else is handled by the logistics system automatically.
Even purchasing customer-specific components is simplified and the component risk is transparent and minimal.
EN ElectronicNetwork first implemented the electronic inventory management and reservation system, AIRS, at their production facility Heiligenhaus (Germany) for a field test.
They wanted to test the operation principles, verify whether the system would work in practice and achieve the desired inventory and fixed capital cost savings.
EN ElectronicNetwork initially entered 300 high runner components into the logistics system for automatic processing.
"Even in the first year, AIRS saved us 25% of inventory management cost - we were delighted", says Thomas Schubert.
Following the first successful field test, AIRS was quickly expanded across a large part of the passive procurement process and is now successfully used for more than 2600 parts in all seven manufacturing facilities in Germany.
EN ElectronicNetwork continues to place its trust in the support of TTI's Hannover's sales office for operation co-ordination.
"The roll-out of the logistics system was flawless; TTI continues to convince us of their know-how, reliability and exceptional delivery performance", emphasises Markus Dillmann.
The AIRS advanced electronic logistics system implemented at EN ElectronicNetwork clearly demonstrates how distributors such as TTI can successfully optimise their customers' procurement processes and shows the benefits for both sides when manufacturers and distributors join forces in supply chain management.
Warehouse costs at the customers' sites can be reduced, resulting in higher cash flow.
Distributors can better and more efficiently plan material requirements because routine tasks during planning and order processing are handled automatically by the logistics system. Request a free brochure from TTI Europe ...
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