Smiths Medical

A Supply Chain Planning Case Study

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Highlights
  • A Supply Chain Planning Case Study

Project and Objectives

A product line as complex as Smiths Medical, which includes hardware, disposables, kits, OEM products and many more classes of items, led to numerous inventory management challenges. Each item had to be planned differently. The amount of stock to carry for each item depended not only on customer demand, but many other factors such as shelf life, demand volatility and lead-time.

Cherelle Whitfield, Director of Inventory Management, and her team knew that intelligently managing inventory could have a major improvement on business performance. This led an initiative to improve Smiths Medical management of these processes, employing ToolsGroup’s SO99+ advanced supply chain planning software for its proven ability to help companies with complex inventory management improve customer service levels and simultaneously reduce inventory costs.

Results & Benefits

The project was run in two tracks. One track used S099+ to set new safety stock levels for 1100 items in their Oracle system, respecting established rules for maximum levels. The results to date include:

  • Product lines out-of-stock reduced by 26%;
  • Product line service levels increased by 2 percentage points (service levels are based on on-time shipping, which is impacted by inventory availability, distribution delays, and customer holds);
  • Back orders reduced by 52%;
  • Inventory reduced by 8%;
  • Safety stock levels reduced by 11%.

A second track used SO99+ to model potential service enhancements and inventory savings. Before the initiative, despite several years of improvement, service levels had plateaued at about 90%. The SO99+ model illustrated that they could redeploy inventory to support volatile SKUs that were stocking out and detracting from service levels. This would allow them to simultaneously increase service levels to 95+% while improving finished good inventory turns.

Next Steps

The next phase of the project is underway with the overarching goal to achieve the 95% service levels across the board, while meeting key performance indicators for inventory turns and forecast accuracy.

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Smiths Medical is a leading global provider of medical devices for the hospital, emergency, home and specialist environments, including many of the most respected brands such as Portex™, Medex™, Deltec™, and Level1.

The company employs 7500 people, with manufacturing concentrated in the US, the UK, Mexico and Italy. As part of Smiths Group plc, a FTSE 100 UK based company, Smiths Medical is well positioned to invest in continuous improvement, technological innovation and customer service..

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