Forecasting and Inventory Planning of Spare Parts

IHI Construction Machinery begins operation of cloud-based, inventory management software from Syncron

Stockholm, SwedenJune 13, 2014 Syncron International, an aftermarket inventory optimization company, announced that IHI Construction Machinery Limited (IHI CM), a Japanese manufacturer of excavators and heavy equipment, is now using its cloud-based global inventory management software.

The Syncron solution used by IHI CM enables forecasting and inventory planning of spare parts.  The application runs out of the Syncron data center, which is located in Stockholm, Sweden.  IHI CM accesses the software-as-a-service (SaaS) product through the Internet.

The IHI CM data, including orders and stock levels, is sent from the company’s enterprise resource planning system (BPCS) to Syncron daily via secure file transfer protocol (FTP).  Order and stock level information is needed to perform forecasting and replenishment calculations. After the calculations are complete, the application sends back the results to the ERP system, which generates purchase orders to their supplies. In addition to reducing stock and improving service levels, the integrated spare parts planning system automates the business processes at IHI CM, which was dependent on manual computation.

By using inventory management from Syncron, IHI Construction Machinery expects to achieve three important goals—immediately achieving 100 percent availability on maintenance parts, resolve parts shortages as soon as possible and bring unwanted stock to zero as soon as possible. 

IHI CM completed a feasibility study with Syncron to evaluate the functionality. Prior to purchasing the system, IHI Construction Machinery provided actual data to Syncron.  The data was used to build a simulation of service level and inventory reduction. Syncron was selected based on the results of this simulation, and because of the availability of a cloud solution, which does not require a large initial financial investment and is faster to implement. Fees for the accessing the software are paid on a monthly basis, which was also important to the software selection process.

“Improving the customer satisfaction by reducing the machine downtime is a common goal for the manufacturers in the industry.  We have been trying to improve our service by monitoring the service level and available-to-promise. However, these indicators are often difficult to forecast even when there is enough data available. While there is always uncertainty in market, over-stocking is also a concern,” said Hiroaki Masuda, director of IHI Construction Machinery Parts Support.  “We needed to have a more reliable forecast and recovery strategy, which Syncron Global Inventory Management can provide. We are expecting to improve the service level and stock reduction based on the results of the simulation.  Syncron is already suggesting replenishment orders based on the inventory policy.”

According to Hitoshi Tachinaba, management director at Syncron Japan, “We expect that IHI CM will see a clear effect at its central warehouse and eventually expand the usage to other warehouses.  The application is running on the cloud, which reduced the initial investment and limited the use of the company’s information technology (IT) resources. There is a trend toward using SaaS in Japan. As a result, we will continue to promote our global inventory management and price management solution delivered in the cloud.”