Worcester transforms ex-stock inventory holding

Central heating system manufacturer Worcester, part of the Bosch group, reckons it’s achieving virtually 100% ex-stock delivery on 4,000 stock lines at minimal cost – and ring fencing its after-market business with key partners and independent heating system firms. The company has been rolling out an inventory optimisation system from Inform that works by providing a mix of real-time forecasting and decision-support for procurement, as well as advanced inventory control and freight cost minimisation. Not only are the stock, cost and customer service positions now far better, but Worcester reports work formerly handled by three people now managed by one, and significantly less traffic to its call centre resulting in five fewer people there. Worcester had been working on this for some time. Back in 1998, its ex-stock record was 95% using what the firm describes as traditional stock control methods. But whereas the industry was demanding 98%, in 2000 it set itself the target of 100%, largely because of the value of its after-market business. The firm has its own field service operation, staffed by 180 engineers – but several million boilers supplied over the last 10 years, and hundreds of thousands of new installations, are maintained by independents. To maintain that revenue stream, and compete with third parties, its spare parts promise is now delivery next day by 3pm. And to achieve that at sensible cost, everything that happens during the day goes through analysis by its new system, with every part re-planned every day, giving a continually updated monthly forecast. “Many thought that our 100% target was simply unrealistic and could not be achieved without huge expense in raising stock levels,” says Tony Wingrove, logistics projects manager at Worcester. “Initially, we did increase stock, but now we have successfully implemented the new systems, we are actually holding less stock in just about every area.” In fact, the project was part of Worcester’s continuous improvement policy, instigated several years ago. The firm has also been overhauling much of its business management, and reviewing and automating processes. Recent times have seen it implement SAP and electronic parts ordering through engineer direct data communications and EDI with its main customers. “The system has had a huge impact not just in inventory optimisation, but also by automating work that used to be resource-intensive,” notes Wingrove. “Demand is at best volatile, and sometimes a large and completely unpredictable order can appear. Despite this, the system has allowed us to reach 100% most of the time and we are showing consistent figure of 99.8%. “The key is the ability of the software to provide very effective exception management, providing a level of real-time monitoring just not possible manually.” Worcester customers like British Gas have also been beneficiaries. British Gas says it’s been able to reduce its own stocks, trusting in the fact that deliveries are received by the required date and earlier. From a rolling 12-month average of 7,000 order lines, outbound service levels to British Gas users now average at 99.87% and stock orders being delivered on time average at 99.70%. “With their system, Worcester is providing a level of service that is unprecedented in the industry,” says Kevin Wakefield, Inventory Manager at British Gas. “It has, in turn, had a big impact on our own business, with our engineers able to provide a level of service on Worcester boilers that was just not possible before.”