Data is no longer just the number or the figures but the secret to a profitable business. Businesses are known to use data analytics and intelligence to make better decisions and savings costs. For any
manufacturing
company, the biggest problem is to decrease the inventory carrying costs.
Micro Turners
, an integrated automotive component manufacturing company has used data and intelligence to bring down its inventory carrying cost to Rs 2.5 crores per annum from Rs 5 Crores per annum in 6 months. “We consume around 4000 tonnes of steel every month. And because we were not clear about the production schedules, customer growth paths or their production schedules, we used to keep the raw material in buffer. There have been times when we have even kept 6000-7000 tonnes of raw material at home. Because of how bulky steel is, our inventory costs were going up, and we needed to do something about it,”
Surjeet Singh
, Head - IT, Micro Turners Micro Turner, said while explaining the challenges the company was facing.
“We had the data and schedules but they were not all in one place. We needed a system which could factor in all the details and parameters and tell us about the quantity we need to keep with us,” he added. The company chose to go ahead with the
SAP
MRP (
Materials Requirement Planning
). It included all the possible parameters before making the forecast. Micro Turners now feeds in the data like what material the company has, what is in the pipeline and what are the customer schedules and what is the customer demand, and the delivery dates. “We have ten plants across the country, and we generate a lot of data from each of these manufacturing plants. When there is no latency between the material flow and information flow, manufacturing costs can be easily controlled and minimized. It is imperative to have the correct IT infrastructure in place. We are in the demand-based manufacturing sector, wherein the vendors that supply accessories to OEMs are based on JIT (just-in-time) or in-line sequencing methodologies,” Singh explained.Micro Turners required an IT infrastructure to enable zero latency within and between business processes. So the company moved its IT infrastructure to
IBM
Power Systems and IBM FlashSystems.
“In our business, we get schedules from customers like TVS, Bajaj, or Honda. They give us their production schedules and plans as to how many bikes they are going to produce or their future figures. This data helps us align our production. We also look at past trends, we know that the last time they asked for related components so they might ask this time also. So our historical data and our customer's growth path helps us align our process,” he explained.The system also factors in the changes in schedules. In case the customers change their schedules, it states how best can the company align its resources to other projects. It does not only help forecast the demand but helps in managing the manpower and saving costs.“Earlier the inventory was at Rs 60 crores and inventory carrying cost was Rs 5 crores per annum. Now we have brought down the inventory cost to Rs 30 crores and the carrying cost is Rs 2.5 crores per annum.It was a major improvement in terms of inventory carrying cost and space to keep inventory as steel takes a lot of space to store. We were able to achieve this in a span of 6 months,” Singh concluded.
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