Increased Inventory TurnsBy adding only six of their sku's to the Aerofil Supermarket Program, our customer saw an increase of 2.5 inventory turns in just three quarters!
Inventory ReductionThose same six sku's saw an inventory reduction of $510,551, while maintaining 100% fill rates!
Pull System Case Study
Customer experiences over $500,000 in inventory savings in just 3 quarters on the Aerofil Supermarket program.
When Aerofil began their partnership with one of the world's most recognized personal care brands, it quickly became apparent that Aerofil could save them millions of dollars in inventory carrying costs by utilizing our Kan Ban system. The plan was to start slow, and let the system prove itself. Our customer identified six sku's as candidates for the program.
In April of 2007, Aerofil adopted the Lean practices of the Toyota Production System and began a never-ending journey of continuous improvement. Today, they're making a major difference to their customers by driving system wide value and profitability across the entire supply chain through the introduction, training and implementation of Lean Manufacturing. With more than 300 years of combined experience, the Aerofil leadership team is not only recognized as experts within the industry, but is also the guiding coalition to their continuous improvement philosophy. By engaging in Rapid Improvement Events (RIEs) throughout the enterprise, "leading by example" is not just a saying, but also a way of life at Aerofil.
The four pillars of the Aerofil Business System (ABS) are 6S (Safety, sort, scrub, set, standardize and sustain), 1-Piece Flow, Standard Work, and Pull Systems. 6S is the first step in the ABS, because it builds the foundation/discipline for all employees and is critical to developing a continuous improvement culture. Aerofil spent two years building a foundation and developing the culture before they were ready to take the next step. In 2009, Aerofil began to implement Supermarkets (pull-systems) throughout the entire supply chain.
Forecast versus Consumption (Push versus Pull)
The one thing every U.S. marketer or manufacturer can unilaterally agree on is that nearly 70% of all forecasting models are typically inaccurate and in many cases can be the main driver of customer stock outs, late deliveries and sometimes even loss of shelf space at major retailers. The Supermarket replenishment process at Aerofil starts with the customer. Using proprietary software developed internally by the Aerofil Lean Department, Aerofil uses customer data, taking into account multiple factors and variations, to establish the ideal Supermarket levels. The Supermarket levels are then set-up to support weekly production runs based on actual customer shipments out of their distribution centers to major marketers across North America. Aerofil then works with the customer to set-up an automated signal, which is sent daily, showing actual sales and shipments from the customer's distribution center on a daily basis.
Once the Customer Supermarket sizes are established, Aerofil then works with their suppliers to establish internal material Supermarkets within Aerofil, as well as within the supplier's facilities. These component Supermarkets are sized to support weekly production.
To start the process, Aerofil receives a daily signal from their customer's distribution center. Upon receipt of that signal, Aerofil populates a Heijunka Box (level loading scheduling tool), which is used to schedule the production lines. The Heijunka device is a representation of their customer's actual inventory levels in their distribution centers. Aerofil then schedules their production lines based off of which items have the lowest amount of inventory. When it is time for production of that product, Aerofil pulls materials out of their internal Supermarkets to support production. Once Aerofil pulls the materials out of their Supermarket, a signal is sent to the suppliers to replenish what was used at Aerofil. Once the supplier sends in the materials to replenish what Aerofil used, they go into production to re-stock the Supermarket at their facility.
The advantages to Supermarkets with Aerofil are:
- Product is produced based on consumption, not forecast
- Lead times are reduced from weeks, to days
- Dramatic reductions in inventory carrying costs
- Improved fill rates
- Increased inventory turns
- Substantial cost savings
Quite simply, each upstream process receives the signal (order) from the downstream process that it needs product, all the way back to the supplier of the raw material. This is not an inventory control system. It is a scheduling system that tells you what to produce, when to produce it, and how much to produce. Since 2009, Aerofil has saved customers in excess of $10mm by implementing the Supermarket process.