Building its field service inventory network has been an extended journey for NetApp. The company began working on this initiative in 1999, when it started working with UPS to integrate its third-party logistics (3PL) globally and when it first started working with Baxter to implement a planning system for the Americas. Through 2002, NetApp continued working with Baxter to extend coverage of the planning system incrementally to Europe and then Asia. Between 2002 and the present, the company began using logistics network modeling capabilities and a new distribution center planning tool from Baxter, and it began working with two additional 3PL providers, Choice Logistics (in South America) and DHL (in Europe and Asia).
Keys to Success
According to Shadmehri, one key to NetApp's success has been the company's collaborative approach to working with its solution and service providers to fine-tune and manage the field service network. It's important to treat your partners as an asset, he said, referring to Baxter Planning Systems, UPS, DHL and Choice Logistics. One aspect of NetApp's partnership with its solution and 3PL providers has been the integration between the planning system and the logistics providers. As orders are placed and fulfilled, and as parts are drawn out of various locations, the planning system immediately communicates the replenishment requirements to, for example, UPS, which can then ensure that the right parts are continuously on their way to the right stocking location.
By employing a unified planning system and taking a flexible supply chain approach to the different regions in which it operates, NetApp has achieved significant results over the duration of the initiative. In addition, NetApp realized a return materials authorization (RMA) fulfillment rate increase to 99.5 percent, reduced its inventory months-of-supply by half with the initial field planning rollout, improved inventory to revenue by greater than 25 percent year over year and saw what Shadmehri described as substantial indirect cost improvement. Shadmehri also said that NetApp has reduced its missed service costs and achieved sizeable savings on expedited shipping and delivery fees.
While Shadmehri attributes much of NetApp's successes in managing its field service operation to such standard factors as senior management commitment to the project, close tracking of measurements and metrics, and a closed-loop corrective action process, he also points to the firepower that the company's planning system is able to bring to bear to address complex replenishments challenges. It takes a robust planning system to achieve 99.5 percent first time fill rates globally, he said, adding, Our customers are confident that we can provide the right part at the right place at the right time.