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Optimizing Complex Wholesale
Distribution Operations
Nicole Pemberton, Director
Procurement & Inventory Management
KGP Logistics
Presentation Overview
• Company Background & Key Stats
• Drivers of Logility Voyager Implementation
• Benefits Achieved
• Q & A
KGP Logistics – Who We Are
• One of the country’s leading providers of Supply Chain Services to the
communication industry including logistics solutions such as:
– Product Distribution and Materials Management
– Product Integration/Manufacturing - Engineer, Furnish and Installation (EF&I) and
Assemble, Wire and Test (AWT)
– Third Party Logistics (3PL)
• Strategic relationships across broad base of OEMs, servicing over 2,500 Customers
• Manage approximately $90 million in telecommunications inventory
• Approximately 650 experienced employees
• Best-in-class distribution center operations
– 15 regional distribution centers, cross-docks, and EF&I/AWT facilities
– Over 1.8 million total square feet
– Fleet of 54 fleet vehicles for differentiated services
• TL9000 and ISO 9001:2000 certified and members of QuEST Forum and Board
• Privately owned, Certified Woman Business Enterprise (WBE)
Company History
KGP Logistics, Inc.
1905 Founded as Union Electric in Abilene, Kansas
1965-1977Union Electric becomes United System
Supply; merges into North Electric; North
Electric’s manufacturing divisions are sold to ITT;
North Supply remains a separate subsidiary of
United Telecom
1993 North Supply Company adopts new name,
Sprint North Supply, as United Telecom
becomes Sprint Management Company
2006 Sprint North Supply adopts new name,
EMBARQ Logistics, as Sprint-Nextel spin-off
local telephone division, EMBARQ
2009 EMBARQ Logistics is acquired by KGP
Telecommunications and renamed KGP
Logistics, Inc.
KGP Telecommunications, Inc.
1973 Founded as Great Lakes Telephone Supply, Inc.
by Kathleen and Dale Putrah in Faribault, MN
1982 KGP Telecommunications, Inc. is founded as a
woman-owned business by Kathleen G. Putrah
2009 KGP Telecommunications, Inc. purchases
EMBARQ Logistics, in New Century, KS
Vision & Mission
Vision
• Be the leading provider of supply chain services to the communications
industry
Mission
• Exceed Customer expectations at the lowest total cost
Distribution & Manufacturing Footprint
Ontario, CA
Juarez, MX
Faribault, MN
New Century, KS
Irving, TX
St. Rose, LA
Powder Springs, GA
Suwannee, GA
Fayetteville, NC
Ponte Vedra, FL
Lake Worth, FL
Warsaw, IN
Distribution Center
Integration Center (Manufacturing)
Distribution and Integration Center
Corporate Headquarters: Faribault, MN
Inventory Planning Statistics
• 7 Distribution Centers
• 4 Manufacturing Locations
• 15K+ Planned SKUs (soon to be 20K+)
• Over 600 Planned Suppliers (4 External Supply Nodes)
• Many constraints…
History of Demand, Inventory & Supply
Planning
1999-2001: Implemented first Demand, Inventory & Supply Planning system
2004-2007: Established vision to evolve planning and inventory management
function to become competitive differentiator in marketplace
2007: Analyzed gaps and established requirements
2008: Evaluated software solutions
2009: Selected Logility Voyager Demand, Inventory & Supply Planning system
Logility Voyager Rollout
August 2009
Project
Kickoff
February 2010
Go Live
Demand
Planning
June 2010
Go Live
Inventory
Planning &
Supply
Planning
Sept 2010
Kickoff
Expansion
Phase:
Dual ERPs &
Additional
Locations
Voyager Implementation Benefits
Improved Efficiency
• Streamlined Multiple Planning & Procurement Processes into One
• Shortened End-to-End Business Process Cycle Time
Improved Visibility
• Customer Level Demand and Forecasts Enabled Collaboration with Key
Customers & Suppliers
• Alerts Quickly Identified Exceptions & Decreased Number of Business Critical
Reports
Improved Inventory Turns & Service Levels
• Advanced Forecasting & Tuning Capabilities (Forecast Accuracy)
• Inventory Parameters Improved Control Over Inventory Investment & Service
Levels
Improved Efficiency
Streamlined 3 Different Supply Planning & Purchasing Processes into 1
Configured Alerts to Focus on Most Critical/Valuable Exceptions
• Most time spent on “A” & “B” SKUs
Shorter, More Frequent Cycle Times Removed Bottlenecks & Allowed More
Even Distribution of Workload
• Eliminated several positions through attrition & re-allocated resources to
other value-add activities
• Enabled review of more exceptions to drive higher inventory turns & service
levels
Centralized Exceptions Decreased Number of Business Critical Reports
PLANNING
MIN/MAX ERP
PURCHASING
NEG AVAIL
LOGILITY
SUPPLY
PLANNING
ERP
PURCHASING
BEFORE AFTER
Improved Visibility & Cycle Time
Function Frequency Before Logility Frequency with Logility
Demand
Planning
Daily Update of Demand (Two
Days in Arrears) & Working of
Exceptions
Daily Update of Demand
(Current) & Working of
Exceptions
Inventory
Planning
Once Per Month Bi-Monthly Mass Update of
Parameters; Daily Updates for
Forecast and/or Individual
Parameter Changes
Supply
Planning
Plan Refreshed Weekly;
Purchases & Transfers All
Released One Day Per Week
Complete Plan Refreshed Daily;
Purchases & Transfers Released
per Staggered Order Cycles or
Daily to Fulfill Backorders
Improved Visibility – Customer Level
Adding “Customer” to Lowest Level of DP Pyramid Enabled Collaboration
• Visibility to specific customers driving exceptions enabled quicker decisions or
identified the need to collaborate on specific SKUs
• Started monthly demand and forecast reviews with key customers and sales
support teams to improve awareness, visibility, and collaborative decisions
• Customers with largest value (spend and inventory investment) and contractual service
levels
• High level categories that are most meaningful (types of orders, product groupings, key
OEMs)
• Demand (actual and adjusted) and forecasts reflected in extended value
• Monthly views as well as daily average per month views (monthly view skews month-
to-month variances due to 4-4-5 week calendar)
• “What if” scenarios to assess impact of recommendations
• Enhanced key supplier collaboration by sharing customer level forecasts (as well
as aggregate planned purchases)
Improved Turns & Service Levels
Ability to “Control” Forecasts at Levels & Combinations Other Than SKU
• Customer • Supplier
• Product Group • Product Class
Demand Profiles to Guide Forecasts
• Over 1/3 of SKUs have less than 12 months of demand history
Variety of Forecast Models ,Tuning, and Inventory Parameters Provide Better
“Fit” for Wide Range of Demand Patterns
• Technician Truck Stocking • Network Maintenance
• Warehouse /Stock Yard Replenishment • Customer Site Installation Projects
• Retail Store Stock • Consumer Fulfillment
• Network Upgrade/Build-out Projects • Seasonal Storm Preparation/Recovery
• Over 80% of SKUs have low forecast confidence
• Mixture of seasonal and non-seasonal
• High number of SKUs purchased by single customer (little demand aggregation)
Improved Turns & Service Levels
Improved Inventory Turns
• 0.22 increase in inventory turns in 3 full months following complete “go live”
• 0.74 increase in inventory turns in subsequent 5 months
Maintained contractual service levels of 95-98% order line fulfillment rates
• Improved service levels by 0.05% in first 3 months (over 96% prior to “go live”)
• Worked in following months to optimize inventory parameters - lowering inventory
where service levels were unnecessarily exceeding targets
• Maintained contractual service levels across product mix, despite experiencing
industry wide component shortages for key network electronic products
Refining forecast accuracy metrics and establishing relevant baseline
• Forecast vs. demand dollars (aggregate, product group, key customers)
• SKU level MAPE by units (12+ or <12 months of demand history)
Questions?
www.logilityconnections.com

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Connections 2011-KGP Logistics 3 22 11

  • 1. Optimizing Complex Wholesale Distribution Operations Nicole Pemberton, Director Procurement & Inventory Management KGP Logistics
  • 2. Presentation Overview • Company Background & Key Stats • Drivers of Logility Voyager Implementation • Benefits Achieved • Q & A
  • 3. KGP Logistics – Who We Are • One of the country’s leading providers of Supply Chain Services to the communication industry including logistics solutions such as: – Product Distribution and Materials Management – Product Integration/Manufacturing - Engineer, Furnish and Installation (EF&I) and Assemble, Wire and Test (AWT) – Third Party Logistics (3PL) • Strategic relationships across broad base of OEMs, servicing over 2,500 Customers • Manage approximately $90 million in telecommunications inventory • Approximately 650 experienced employees • Best-in-class distribution center operations – 15 regional distribution centers, cross-docks, and EF&I/AWT facilities – Over 1.8 million total square feet – Fleet of 54 fleet vehicles for differentiated services • TL9000 and ISO 9001:2000 certified and members of QuEST Forum and Board • Privately owned, Certified Woman Business Enterprise (WBE)
  • 4. Company History KGP Logistics, Inc. 1905 Founded as Union Electric in Abilene, Kansas 1965-1977Union Electric becomes United System Supply; merges into North Electric; North Electric’s manufacturing divisions are sold to ITT; North Supply remains a separate subsidiary of United Telecom 1993 North Supply Company adopts new name, Sprint North Supply, as United Telecom becomes Sprint Management Company 2006 Sprint North Supply adopts new name, EMBARQ Logistics, as Sprint-Nextel spin-off local telephone division, EMBARQ 2009 EMBARQ Logistics is acquired by KGP Telecommunications and renamed KGP Logistics, Inc. KGP Telecommunications, Inc. 1973 Founded as Great Lakes Telephone Supply, Inc. by Kathleen and Dale Putrah in Faribault, MN 1982 KGP Telecommunications, Inc. is founded as a woman-owned business by Kathleen G. Putrah 2009 KGP Telecommunications, Inc. purchases EMBARQ Logistics, in New Century, KS
  • 5. Vision & Mission Vision • Be the leading provider of supply chain services to the communications industry Mission • Exceed Customer expectations at the lowest total cost
  • 6. Distribution & Manufacturing Footprint Ontario, CA Juarez, MX Faribault, MN New Century, KS Irving, TX St. Rose, LA Powder Springs, GA Suwannee, GA Fayetteville, NC Ponte Vedra, FL Lake Worth, FL Warsaw, IN Distribution Center Integration Center (Manufacturing) Distribution and Integration Center Corporate Headquarters: Faribault, MN
  • 7. Inventory Planning Statistics • 7 Distribution Centers • 4 Manufacturing Locations • 15K+ Planned SKUs (soon to be 20K+) • Over 600 Planned Suppliers (4 External Supply Nodes) • Many constraints…
  • 8. History of Demand, Inventory & Supply Planning 1999-2001: Implemented first Demand, Inventory & Supply Planning system 2004-2007: Established vision to evolve planning and inventory management function to become competitive differentiator in marketplace 2007: Analyzed gaps and established requirements 2008: Evaluated software solutions 2009: Selected Logility Voyager Demand, Inventory & Supply Planning system
  • 9. Logility Voyager Rollout August 2009 Project Kickoff February 2010 Go Live Demand Planning June 2010 Go Live Inventory Planning & Supply Planning Sept 2010 Kickoff Expansion Phase: Dual ERPs & Additional Locations
  • 10. Voyager Implementation Benefits Improved Efficiency • Streamlined Multiple Planning & Procurement Processes into One • Shortened End-to-End Business Process Cycle Time Improved Visibility • Customer Level Demand and Forecasts Enabled Collaboration with Key Customers & Suppliers • Alerts Quickly Identified Exceptions & Decreased Number of Business Critical Reports Improved Inventory Turns & Service Levels • Advanced Forecasting & Tuning Capabilities (Forecast Accuracy) • Inventory Parameters Improved Control Over Inventory Investment & Service Levels
  • 11. Improved Efficiency Streamlined 3 Different Supply Planning & Purchasing Processes into 1 Configured Alerts to Focus on Most Critical/Valuable Exceptions • Most time spent on “A” & “B” SKUs Shorter, More Frequent Cycle Times Removed Bottlenecks & Allowed More Even Distribution of Workload • Eliminated several positions through attrition & re-allocated resources to other value-add activities • Enabled review of more exceptions to drive higher inventory turns & service levels Centralized Exceptions Decreased Number of Business Critical Reports PLANNING MIN/MAX ERP PURCHASING NEG AVAIL LOGILITY SUPPLY PLANNING ERP PURCHASING BEFORE AFTER
  • 12. Improved Visibility & Cycle Time Function Frequency Before Logility Frequency with Logility Demand Planning Daily Update of Demand (Two Days in Arrears) & Working of Exceptions Daily Update of Demand (Current) & Working of Exceptions Inventory Planning Once Per Month Bi-Monthly Mass Update of Parameters; Daily Updates for Forecast and/or Individual Parameter Changes Supply Planning Plan Refreshed Weekly; Purchases & Transfers All Released One Day Per Week Complete Plan Refreshed Daily; Purchases & Transfers Released per Staggered Order Cycles or Daily to Fulfill Backorders
  • 13. Improved Visibility – Customer Level Adding “Customer” to Lowest Level of DP Pyramid Enabled Collaboration • Visibility to specific customers driving exceptions enabled quicker decisions or identified the need to collaborate on specific SKUs • Started monthly demand and forecast reviews with key customers and sales support teams to improve awareness, visibility, and collaborative decisions • Customers with largest value (spend and inventory investment) and contractual service levels • High level categories that are most meaningful (types of orders, product groupings, key OEMs) • Demand (actual and adjusted) and forecasts reflected in extended value • Monthly views as well as daily average per month views (monthly view skews month- to-month variances due to 4-4-5 week calendar) • “What if” scenarios to assess impact of recommendations • Enhanced key supplier collaboration by sharing customer level forecasts (as well as aggregate planned purchases)
  • 14. Improved Turns & Service Levels Ability to “Control” Forecasts at Levels & Combinations Other Than SKU • Customer • Supplier • Product Group • Product Class Demand Profiles to Guide Forecasts • Over 1/3 of SKUs have less than 12 months of demand history Variety of Forecast Models ,Tuning, and Inventory Parameters Provide Better “Fit” for Wide Range of Demand Patterns • Technician Truck Stocking • Network Maintenance • Warehouse /Stock Yard Replenishment • Customer Site Installation Projects • Retail Store Stock • Consumer Fulfillment • Network Upgrade/Build-out Projects • Seasonal Storm Preparation/Recovery • Over 80% of SKUs have low forecast confidence • Mixture of seasonal and non-seasonal • High number of SKUs purchased by single customer (little demand aggregation)
  • 15. Improved Turns & Service Levels Improved Inventory Turns • 0.22 increase in inventory turns in 3 full months following complete “go live” • 0.74 increase in inventory turns in subsequent 5 months Maintained contractual service levels of 95-98% order line fulfillment rates • Improved service levels by 0.05% in first 3 months (over 96% prior to “go live”) • Worked in following months to optimize inventory parameters - lowering inventory where service levels were unnecessarily exceeding targets • Maintained contractual service levels across product mix, despite experiencing industry wide component shortages for key network electronic products Refining forecast accuracy metrics and establishing relevant baseline • Forecast vs. demand dollars (aggregate, product group, key customers) • SKU level MAPE by units (12+ or <12 months of demand history)

Editor's Notes

  1. Intro
  2. KGP’s 2500+ customers include telecommunications companies (large national companies to small rural companies/municipalities/contractors); providers of wireless, cable TV, broadband, and data services; as well as OEMs that service the communications industry In addition to wholesale distribution services we also function as an outsourced supply chain operation for management of minor and major materials for some of the nations largest communications companies We “manufacture” or integrate products in a number of our locations as well We also provide 3PL warehouse management , order fulfillment, and transportation services for customer owned inventory that oftentimes complement products we sell –providing complete order shipment from a single facility
  3. KGP has been in business since the early 1900s Many name changes, most recently from Sprint to Embarq At the time Embarq was acquired by Century Tel to become CenturyLink, Logistics division was acquired by KGP Telecommunications and became KGP Logistics Private business owned by Kathleen G. Putrah, headquartered out of Faribault, MN
  4. Purchasing Logility Voyager was a strategic decision to support KGP’s mission of being the lowest cost provider by bringing additional optimization too our Inventory Management capabilities
  5. You will see we have a footprint of DCs and Manufacturing facilities primarily within the domestic US Current view of locations—planned DC expansions into PA next month and into NW later in the year Outside of a few customer outside the US (i.e., Puerto Rico, Guam), customer base is domestic KGP has a house brand of product we have manufactured outside of US that expands our supply path internationally
  6. Aggregation of the 4 supply nodes is based primarily on differences in the order cycles/supply calendars (i.e., suppliers purchase daily-weekly, purchase monthly) or have unique planning requirements (i.e., international, free inbound freight allowances) Most significant supply constraint is vendor minimum order values From an SP perspective, we release planned orders in ERP that become firm purchases or transfers automatically with very little manual touches - - solve for the constraints in SP, helping streamline process as much as possible
  7. First Demand, Inventory & Supply Planning system implementation was led by team of consultants as part of major multi-system transformation project Logility implementation - design and implementation project led by internal team with Logility consulting support 2004-2007 - Series of events and changes established long-term objective to evolve supply chain planning and inventory management function to become “best in class” and provide competitive advantage in marketplace (capabilities, customer service results and financial performance) Gap analysis involved formal benchmarking, best-in-class research, and development of target future state 2008-2009 – Project was “on hold” while our company was going through its acquisition
  8. Typical implementation would have gone faster, but delays came as part of post-acquisition state in which we started the project (e.g., migration of network infrastructure and architecture to enable virtual desktop computing and change server platforms) Not reflective of how fast could have gone if future state architecture would have been in place Expect completion of expansion phase currently in to complete in May if all goes as planned (again dictated by other system changes that are predecessors)
  9. Add personal examples that may add “color” to these statements
  10. Be prepared for questions about frequency of IP updates
  11. Customers – units are not nearly as meaningful as extended value; SKU and Products to detailed Suppliers – units by individual part number is most meaningful – aggregate view for all customers with breakouts for some select customers that are largest drivers of usage 25 OEMs make up 80% of inventory investment
  12. Truck Stock – minor materials for repairs and installations Consumer – DSL Installation Kits, cordless phones Retail stores – wireless handsets Network maintenance or upgrade projects – minor and major materials, sporadic or project specific usage levels High % of inventory value also tied to SKUs with low forecast confidence All make demand planning very challenging
  13. Metrics are specific to planned SKUs