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"Demand Solutions software helps small and midsize enterprises (SMEs)
as well as major divisions of Fortune 500 corporations reach their planning goals."
Source : Demand Solutions
Case Study: Terumo
Supply Chain is also known as :
Supply Chain Analytics,
Supply Chain Automation,
Supply Chain Benchmarking,
Supply Chain Best Practices,
Supply Chain Certification,
Supply Chain Collaboration,
Supply Chain Companies,
Supply Chain Consultant,
Supply Chain Costs,
Supply Chain Council,
Supply Chain Definition,
Supply Chain Distribution,
Supply Chain Efficiency,
Supply Chain Excellence,
Supply Chain Execution,
Supply Chain Finance,
Supply Chain Forecasting,
Supply Chain Information,
Supply Chain Innovation,
Supply Chain Integration,
Supply Chain Inventory,
Supply Chain Issues,
Supply Chain Logistics,
Supply Chain Management,
Supply Chain Marketing,
Supply Chain Models,
Supply Chain Network,
Supply Chain News,
Supply Chain Operations,
Supply Chain Optimization,
Supply Chain Outsourcing,
Supply Chain Performance,
Supply Chain Planning,
Supply Chain Processes,
Supply Chain Procurement,
Supply Chain Purchasing,
Supply Chain Quality,
Supply Chain Risk,
Supply Chain Security,
Supply Chain Services,
Supply Chain Software,
Supply Chain Solutions,
Supply Chain Sourcing,
Supply Chain Strategy,
Supply Chain Technology,
Supply Chain Tools.
Terumo Cardiovascular Systems (Terumo CVS) is a
global manufacturer and distributor of a wide spectrum of products for the
medical industry. The company has more than 1,500 finished good SKUs composed of
hardware such as heart-lung machines, disposables such as blood oxygenators, and
a steady flow of custom tubing pack orders. Due to the delicate nature of the
industry, products undergo strict quality testing and sterilization. Terumo CVS’
level of precaution to keep end users safe requires a tedious supply chain.
A single tubing pack used during open-heart surgery, for example, is
manufactured in Ashland, Massachusetts then shipped to New York for
sterilization. From New York, the tubing pack travels to Maryland to be
incorporated with another component and then packaged. The finished product is
then sent to one of the company’s five distribution centers. From the
distribution center, it is finally shipped to a hospital and used on a patient.
With so many product variations and steps in the supply chain, it is easy to
understand the challenges inherent in Terumo CVS’ supply and demand planning.
The company previously used JD Edward’s forecasting system, which made tracking
the many plants and distribution centers and accounting for the seasonality of
its products difficult. “Believe it or not, even medical products are seasonal,”
says Kevin Doughty, Director of Supply Chain Management. “Our three biggest
sales months are October, January and March because people avoid having surgery
during the holiday season.”
Terumo CVS implemented Demand Solutions Forecast
Management (DS FM) and Demand Solutions
Requirements Planning (DS RP) in 2006 to provide visibility into its
multiple plants and distribution centers and to forecast the unique seasonality
of its products.
“Our biggest sales months are October, January and March
because people avoid having surgery during the holiday season.”
Demand Solutions quickly helped the company achieve its main business
objectives while pleasantly surprising management with additional, unanticipated
benefits.
“In one fiscal year, Demand Solutions has saved us $1 million by reducing our
inventory by 36 percent,” says Doughty. “We experienced a rapid return on
investment just with the inventory reduction, not to mention what we’ve saved in
back orders, write-offs and obsolete inventory.”
Along with reducing inventory by more than one-third, Demand Solutions has
increased Terumo CVS’ inventory turns from 3.1 to 4.1. The company’s fill rates
were good before Demand Solutions – 97.5 percent in fiscal year 2006 – but
escalated to 99 percent for fiscal year 2007.
“In one fiscal year, Demand Solutions has saved us $1 million
by reducing our inventory by 36 percent. We experienced a rapid return on
investment just with the inventory reduction, not to mention what we’ve saved in
back orders, write-offs and obsolete inventory.”
— Kevin Doughty, Director of
Supply Chain Management
With an average shelf life of three to five years and little visibility,
Terumo CVS’ obsolete inventory was dragging down profits. Unlike most software
companies, Demand Solutions
develops its planning tools with the underlying
philosophy that people are smarter than software. “My favorite functionality in
Demand Solutions Requirements Planning (DS RP) is the ability to manage by
exception,” says Doughty. “Now that we can use statistical formulas along with
our own gut instincts, we can do our jobs better.”
The executives at Terumo CVS hold monthly Sales & Operations Planning
meetings to make strategic decisions based on the forecasts from Demand
Solutions.
“Prior to Demand Solutions, I could not defend my forecast reports,” says
Doughty. “Now, not only do I trust the reports from Demand Solutions, but the
executives do too. Our meetings are much smoother now and we have the reliable
information necessary to make top-level decisions.”
“Having visibility into the supply chain creates a ripple effect of
benefits,” says Dan Baksa, Senior Account Manager for Demand Solutions. “Terumo
CVS is an excellent example of a customer that had specific goals in mind when
it implemented Demand Solutions and has been pleased with the added benefits of
tightening its planning.”