Siemens Power Generation Eyes Inventory Optimization

Industrial Applications Division deploying SmartSoftware forecasting solution in initiative to improve customer service levels

Industrial Applications Division deploying SmartSoftware forecasting solution in initiative to improve customer service levels

Belmont, MA — May 3, 2006 — The Industrial Applications Division of Siemens Power Generation (PG) has purchased a forecasting solution from Smart Software to support its global service business as part of an initiative to optimize inventories and improve customer service levels.

The Industrial Applications Division of Siemens PG sells gas and steam turbines, as well as compressors, and it services equipment in the field that can be 50 years old or more. These machines are used by customers in the oil and gas industries and in the paper and sugar industries, among others.

The group's customer base includes a variety of sites running many different types of equipment that potentially require millions of parts to keep them in service. In fact, 30,000 of those parts are "active," and a majority of those have intermittent or irregular demand.

Historically, each of Siemens PG' stocking locations has been responsible for forecasting its own inventory, typically by informal or judgmental means. These methods often resulted in parts shortages for some critical parts as well as excess inventory for others.

Now Siemens is counting on Smart's SmartForecasts Enterprise solution to help the company's service business optimize inventory stocking levels and improve customer service. Siemens will integrate SmartForecasts with the division's SAP system and use the new planning solution, with its intermittent demand forecasting technology, to forecast parts demand and inventory stocking levels at the service business' six product centers.

"Our aim is to harmonize our approach to inventory planning across locations with a best-in-class demand planning and inventory optimization solution," said Ken Winn, director of global resource management for the Industrial Applications Division's service business. "SmartForecasts will provide us with a cost effective way to maximize our service levels and help make sure we have the right parts in the right place when they're needed."

Siemens PG selected SmartForecasts after an evaluation process involving four potential software vendors. Smart said that it was chosen because of its intermittent demand forecasting and inventory optimization tools, its ability to integrate with the Siemens SAP system and overall cost effectiveness. The Industrial Applications Division is the second Siemens business unit to license SmartForecasts

The Power Generation Group is one of the top companies in the international power generation sector. In fiscal 2005, Siemens PG posted sales amounting to approximately $10.2 billion. PG has a work force of approximately 33,500 worldwide.

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