2005 Supply & Demand Chain 100 Case Study - Deere & Company Commercial & Consumer Equipment Division / SmartOps Corporation

Profiles in Supply Chain Enablement: $3.5 billion division eliminates $1 billion in inventory costs using planning and optimization solution

Company
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Area(s) of Enablement
Enabler

SDCE 100 2005 Case Study:



  • Five product lines — consumer and commercial riding lawn equipment and mowers, golf course mowers and aerators, utility vehicles and utility tractors — comprise 100 product families.


  • Most products require off-the-shelf availability or consumers will buy elsewhere.


  • 70 percent of products experience seasonal demand, with 65 percent of retail sales between March and June.


  • Financing incentives encouraged dealers to carry inventory.


  • Even with ample inventory, dealers frequently lacked proper product configurations in stock and were dissatisfied with C&CE's on-time performance.


The Solution







The Results





  • Enterprise-wide system integration boosted on-time factory shipments from 63 percent to 92 percent while maintaining end-customer service levels at 90 percent.


  • During peak season, the company doubled replenishment frequency with no increase in transportation costs, thanks to better planning.


  • MIPO automates and streamlines planning and optimization tasks, eliminating manual data entry and human error.


  • Aged inventory dropped from $140 million to under $50 million, avoiding the need for product discounts and saving $10 million annually.


  • At the end of 2004, C&CE met its $1 billion inventory reduction/avoidance goal, a full year ahead of schedule.


  • Savings translated into more than $107 million in positive shareholder value add (SVA), a measurement that positively affects share price.






For more stories of successful supply chain implementations, read the "2005 Supply & Demand Chain Executive 100" article in the June/July 2005 issue of the magazine. Also watch the Today's Headlines section of SDCExec.com every Tuesday and Thursday for more in depth best practices drawn from this year's Supply & Demand Chain Executive 100.

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