Keeping Supply Chain Transformation Simple

A no-frills approach and collaborative supplier relations prove keys to success in inventory optimization at Stryker Instruments


Stryker Instruments designs and manufacturers a range of complex specialty surgical equipment used in operating rooms around the world. But when it comes to deploying new technology to streamline the company's supply chain, Stryker's operating philosophy is "keep it simple," according to Mark Lincoln, director of manufacturing at the Kalamazoo, Mich.-based division of $4.87 billion Stryker Corporation.

"Many of our strategies are built around simple philosophies, and the simplest is, let's not make things more complicated than they need to be," says Lincoln, who recently had the opportunity to put that philosophy to the test when Stryker undertook a project to improve inventory visibility and real-time communications with its supply base. Lincoln's experience leading this supply chain enablement project offers insights into the benefits and challenges of applying simplicity to complex supply chain problems.

The Groundwork for Transformation

Stryker Instruments first developed a strategy for improving its supply chain back in the mid-1990s, when the company also began working externally to establish closer partnerships with its suppliers. At the time, Stryker's approach was to share as much information as possible with its supply base, albeit in a manual fashion, to help the suppliers run their own businesses more efficiently and, consequently, serve Stryker better. The company also established a supplier advisory board that met quarterly with Stryker's top dozen suppliers to discuss issues in the supply chain and ways to improve the supply chain that would benefit all the parties involved.

In the late 1990s and moving into the new millennium, Stryker turned its focus to its own operations, working internally to implement lean manufacturing and streamline its production processes. As those efforts progressed, the company began to look at addressing two supply chain issues. First, Stryker wanted to target inventory reduction by implementing an electronically enabled, or e-commerce-based, vendor-managed inventory (VMI) program. "I wouldn't say that inventory management was a huge problem for use, but we just knew that we wanted to do something different to control our inventory a little bit better," Lincoln says. Essentially, Stryker wanted to give its U.S. and overseas suppliers visibility into the division's inventory information without having to implement an expensive electronic data interchange (EDI) system. Data targeted for exchange with suppliers included forecast, consumption, shipping and receipt information coming from the company's manufacturing resource planning system at its Kalamazoo facilities.

In addition, the company thought that it could streamline its purchasing function so that Stryker could maintain or reduce headcount in procurement even as it grew the business. The company also believed that if it could relieve its procurement staff of manual chores and day-to-day management tasks, the purchasing function could refocus on more strategic activities and become more proactive in managing the company's supply chain.

As Stryker began examining its options for accomplishing these two goals, the company turned to its supply base for consultations — and this is where all the relationship- building that Stryker had done in years past paid off. Rather than encountering a suspicious supply base wary of change, Stryker found suppliers amenable to participating in the project. "We created a steering committee with our suppliers and tried to make sure we were able to answer all the questions and concerns that they would have from a supply chain standpoint. We didn't do [this project] in a vacuum," Lincoln explains. Together, Stryker and its suppliers drew up a set of functional specifications that included the top ten capabilities they believed were necessary in a solution to address Stryker's two objectives. This process ensured supplier buy- in for the project from the very start and would help smooth the implementation of the solution later.

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