Planning engine manages volatile demand without stockpiling inventory

Until just a few months ago, PEMSTAR's strategy for dealing with constant changes to incoming orders was to build inventory buffers. But management at the Rochester, Minn.-based electronics services provider knew there had to be a better way.

“We needed a solution to do 'What-if?' analysis,” says Michael Miller, executive director of corporate business systems at PEMSTAR. “We receive many demand changes, and we would spend an inordinate amount of time analyzing those changes, or drop in [orders].”

This past April, PEMSTAR integrated its Infor (MAPICS) XA ERP system with the Kinaxis RapidResponse advanced planning engine. The engine allows a company to constantly monitor specific activities in its supply chain, and respond quickly when unexpected events occur.

At PEMSTAR, three teams work with the system: program managers who interface with customers; manufacturing planners who work with manufacturing and procurement; and all the buyers.

When planners or managers receive orders or demand changes, they can log on to RapidResponse to update orders, or create 'What-if?' forecasting scenarios. A simple click of a button can run a scenario, which generates a list of critical supply items that are affected by the customer request. Program managers and planners can then quickly analyze the demand and supply situation, and send an Excel report to customers detailing what issues—if any—PEMSTAR might have in fulfilling the request. If there are issues with meeting an order, customers can contribute to the resolution, such as offering an alternate supply source or changing order priorities.

This system, as Miller puts it, is an “always-on MRP [material requirements planning] analytic, in which it takes seconds to regenerate changes that have been implemented in a scenario.” Previously, PEMSTAR needed a week or two to get a clear picture of its ability to respond to a changed order. Now it takes a few hours, and customers are part of the process—which they like, says Miller.

PEMSTAR plans to roll out RapidResponse at all worldwide locations, tailoring the deployments to each facility's needs. In Austin, Texas, for example, high-end controllers are being built to accommodate highly customized needs. RapidResponse is in use, but with added features—such as a modified list of components—that aren't found at every PEMSTAR location. Other deployment plans include developing a master schedule for certain customers—something that the previous MAPICS ERP solution couldn't do prior to RapidResponse.

PEMSTAR already reports better “What-if?” analysis, resulting in more effective management of MRP messages, as well as marked improvement in inventory turns.

“As we've implemented across different sites,” says Miller, “we've seen a great deal of collaboration internally—specifically between purchasing and programming management teams—which results in being more responsive to our customers. RapidResponse empowered our people to make accurate decisions, and enabled them to provide real-time information when our customers need it.”