Juno Lighting Group identified an opportunity to reduce costs by reducing safety stock levels, but was required to maintain high service levels. This challenge was beyond the capabilities of their ERP system. How could they accomplish these two objectives?
Implemented TCLogic’s solution to optimize their inventory with the following results:
Juno Lighting Group is a leader in the design, assembly and marketing of recessed and track lighting fixtures. The company is a subsidiary of Square D Company and its annual revenues exceed $200 Million. Juno’s lighting products include eight brand names distributed through six facilities in the United States and Canada. Customers include over 1,400 distributors and retailers including big-box retail.
To succeed in today’s ‘Flat World’, companies need to continuously explore ways to reduce costs while increasing quality and service levels. For Juno this ideology has included importing components from Asia, adopting a lean manufacturing process, and optimizing inventory beyond the capabilities of a legacy ERP system. But knowing what benefits a new solution will achieve, at what cost, and over what time frame are critical to any decision. Juno’s Director, Production/Inventory Control, Chris Folmar, comments“As part of our decision process TCLogic used ROI+ to do a single point-in-time analysis on every SKU at every Juno distribution center to determine what improvements could be achieved. We got comfortable that we could reduce safety stock by 25% while consistently maintaining extremely high in-stock availability. Today Juno is achieving both objectives and the inventory reductions have occurred twice as fast as we projected.”
ROI+ enhances or improves upon a variety of information and calculations necessary for a company to make performance improvements in the complex area of inventory optimization. With Juno, ROI+ was used to analyze and implement business rules for each SKU at each distribution center, including the addition of a report and query capability for service levels by part. A new approach to evaluate forecast accuracy was implemented to provide ongoing error of estimate analysis. Other key performance data and metrics are accessed from the ERP system so that all critical inventory-related information can be immediately accessed and analyzed simultaneously. The result has been a reduction of excess safety stock in the amount predicted while maintaining critically high service levels.
Juno Lighting’s evaluation and implementation process demonstrates a cautious, well-informed, and successful approach to achieving inventory improvement goals without taking a lot of risk.
First, Juno engaged TCLogic to perform a single point-in-time analysis of every SKU in every warehouse. This revealed a close approximation of what improvements in inventory levels could be achieved at a variety of targeted service levels.
Second, Juno implemented ROI+ to optimize a limited number of critical SKU’s for 90 days, which confirmed the initial estimates of improvement potential.
Third, Juno approved a full implementation of ROI+ on a monthly subscription basis, with an option to purchase the software solution at a future date. This allows Juno time to confirm that the company’s projected IRR for this project will be achieved.
A subscription with a purchase option also gives Juno flexibility in the event of a change in strategy regarding their ERP and Supply Chain systems and affiliated companies.