What companies do to strengthen their competitive position permanently, is to optimize the material flow throughout the supply chain in addition to an error free and efficient production environment. Blue Harbors satisfied this requirement using a full automated replenishment solution for external procured materials based on standard SAP ERP. We extended the pull principle Bosch uses for their shop floor control to their procurement process.
Massively reduced inventories
What we achieved with implementing a full automated Kanban replenishment solution was to massively reduce inventory level. The Kanban control is based exclusively on the current consumption of manufactured products. In plain English: At Bosch, the only materials in stock are the ones that are needed for production within a defined time period. While in the “old” kanban” environment, an employee had to manually coordinate the orders, the new process triggers the replenishment orders fully automatically. Our client reduced their inventory by up to 75% and also improved the cooperation with the suppliers.
The system recognizes, which quantities need to be delivered from a respective supplier, automatically generates scheduling agreement releases with the correct quantities and groups them into a summarized JIT call . This call out then will be automatically transmitted to the appropriate vendor via EDI or Fax. Manual intervention by the purchasing department are practically obsolete. Bosch uses standard SAP Kanban control monitor. We talked them out of developing a custom one since standard SAP covered all their needs.
In regards to reporting to the supplier, we did configure the system that they would not only get today’s JIT delivery schedule but also a forecast delivery schedule to be able to better plan their production processes. This increased the reliability of our supplier and ensures that our client received most of it Kanban materials within a few hours today as this necessary to avoid fluctuations in the supply chain.
Hardly any system modification necessary
Pretty surprising but indeed possible – most of the requirements could be satisfied with standard SAP ERP. For some of the more unique requirements such as as Kanban control cycles for WM managed storage locations, packaging materials and handling units, Blue Harbors developed custom solution together with the local IT team. We did not have to make a distinction between deliveries at time of goods receipt. The delivery triggered by Kanban can be posted like any other receipt with your standard GR transactions. The use of standard labels (VDA or GTL / Global Transport Label) is possible and was used, since there were no defined Kanban numbers necessary.
This process reduced the inventory levels for this client tremendously. It was made part of a template and will be rolled out to other sites.