A Vision to Improve Parts Planning
In early 2001, Lucent's Supply Chain Network (SCN) services division
launched a groundbreaking initiative. Their vision was to improve customer
service, build loyalty and win new customers with better service as
their main competitive advantage. The caveat to this initiative was
that the improvements in service could not come at a higher cost - in
fact, costs needed to go down.
Their existing parts planning system, while adequate to maintain their existing
service levels, did not have the ability to factor in the true costs of inventory
stocking. Hidden variables like stockout costs, rush charges, customer value,
and hundreds more were not being tracked or calculated to determine optimal
stocking levels.
To truly boost service levels, without costly inventory "padding," Lucent needed
to implement a system that gave them precision insight into optimal stocking
levels at warehouses scattered across the globe. They needed to know the true
cost of their inventory, which includes the costs associated with customer
service problems. Lucent needed Baxter.
The Baxter Solution
Unwilling to sacrifice cost savings or customer service, Lucent turned to service
parts supply chain optimization software. After a thorough review of the available
technology, Lucent chose
Baxter Planning Systems based on their ability
to go beyond mere cost savings to using service excellence as a strategic weapon.
Prophet by Baxter™ is Baxter's software suite that helps Lucent determine
the optimal location and stocking amounts for each of their thousands of parts.
In addition, Lucent implemented the optional Supply Planning, Product Forecasting
and Material Forecasting modules to give them precision insight into future
parts planning needs and allowing them to fine-tune their service levels on
a global scale.
The Results
The Baxter solution was implemented for Lucent's North American operations
in just 4 weeks, and the company began seeing customer service improvements
immediately. Their compliance level on same- and next-day service calls rose
dramatically while customer complaints virtually disappeared. Within a few
months, their inventory levels dropped 22%, with more reductions anticipated
as the product is rolled out worldwide.
