Posted by Tony Kontzer, Guest Blogger
It turns out a NetSuite-powered approach to materials resource planning can help ensure that all students can clearly hear their teacher and fellow students.
Lightspeed Technologies, a maker of classroom audio systems designed to provide access for all students, has made just such a discovery. The company, which has been running NetSuite since 2005, has applied the emerging practice known as demand-driven material requirements planning (DDMRP) to optimize its supply chain. The company launched its DDMRP effort last fall, which combines traditional MRP with distribution resource planning, lean manufacturing practices, Six Sigma process improvement techniques and a focus on innovation. The result has been a refinement to the supply chain that has enabled the company to ensure optimal inventory levels, and has better equipped it to handle seasonal trends and new product launches.
NetSuite has proven to be a critical component. Inventory levels have been dramatically reduced during the same period that customer satisfaction rates have actually risen to an incredible 83 percent.
"Getting on NetSuite is one of the best things we've ever done because we can adapt to change," said Carl Cox, executive vice president of operations and CFO at the Tualatin, Ore.-based company, during a session at SuiteWorld 2014 last week. In other words, the flexibility NetSuite affords Lightspeed has enabled the company's DDMRP adoption to fire on all cylinders.
According to Cox, a recent case study shows that with a classroom audio system optimized for speech intelligibility, children are able to hear and understand an average of 15,000 words per day compared to 10,000 without such a system That's a million words a year they're missing, creating huge gaps in their learning experiences. In fact Lightspeed believes so strongly in the impact its products can have that the challenge is simple: get its classroom audio systems into as many classrooms as possible, as quickly and efficiently as possible.
In other words, the sooner the tools reach the classroom, the fewer words students will miss. Along those lines, Lightspeed was highly motivated to ensure that it always has on hand everything it needs to ship out completed products.
Cox said that prior to its adoption of DDMRP methodologies, it wasn't uncommon for the company to find itself unable to ship products because it was out of a $10 component and unable to replenish its supply quick enough. The company has a sales cycle of 12 to 18 months, but individual part lead times range from four months down to a day, and orders change frequently, placing a premium on being able to adapt quickly. With DDMRP methodologies in place, the company is now able to identify inventory issues before they become problems instead of having to determine the cause after shipments are unexpectedly delayed.
"We have changed our work from 'what' to 'why'," he said. "Now we know what's going on."
Similarly, Cox said the company used to avoid such problems by simply gathering as much inventory as possible to avoid parts shortages. But that often led to the contrasting issue of excess inventory, so the company decided to focus on optimizing its replenishment. More specifically, it wanted to stop relying on a monthly spreadsheet as an MRP tool, and instead provide visibility across its supply chain.
That's when Cox attended last year's SuiteWorld and learned about DDMRP.
"We saw it as a method to completely change how we work, and address critical supply chain issues," he said. "MRP is fraught with forecasting errors, and what happens to most of us is we have oscillation between having too much and too little inventory."
Lightspeed also was inspired by the success other companies had with DDMRP. Cox cited a 99.7 percent satisfaction rate with customer service at Unilever, while LeTourneau Technologies and Oregon Freeze Dried have reported growth rates that are several times greater than their inventory growth since adopting the methodologies.