Page 201 - DCAP302_ENTERPRISE_RESOURCE_PLANNING

Unit 11: ERP-II

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Case Study Quantum corporation streamlined its supply chain
uantum Corporation (quantum.com) is a major U.S. manufacturer of hard-disk
drives and other high-technology storage components. Quantum faced two key
Qchallenges in its manufacturing process.
The first challenge was streamlining its component supply process in order to reduce on-
hand inventory. Quantum’s traditional ordering process was labor-intensive, involving
numerous phone calls and manual inventory checks. To ensure that production would not
be interrupted, the process required high levels of inventory. Quantum needed a solution
that would automate the ordering process to increase accuracy and efficiency, reduce
needed inventory to 3 days’ supply, and provide the company’s purchasing agents with
more time for non-transactional tasks.
Quantum’s second challenge was to improve the quality of the components’ data in its
Material Requirements Planning (MRP) system. Incomplete and inaccurate data caused
delays in production. Quantum’s solution of manually reviewing reports to identify errors
was labor intensive and occurred too late; problems in production were experienced before
the reports were even reviewed. Quantum needed a technology solution that would enable
to operate proactively to catch problems before they caused production delays.
The solution that Quantum chose to automate its component supply process was an
inter-enterprise system that automatically e-mails reorders to suppliers. Initiated in 1999,
the system uses an innovative event detection and notification solution from Categoric
Software (categoric.com). It scans Quantum’s databases twice daily, assessing material
requirements from one application module against inventory levels tracked in another.
Orders are automatically initiated and sent to suppliers as needed, allowing suppliers to
make regular deliveries that match Quantum’s production schedule. The system not only
notifies suppliers of the quantity of components required in the immediate orders, but also
gives the supplier a valuable window into amount of inventory on hand future weekly
requirements.
The system also provided other improvements. It enabled Quantum to tap into multiple
data sources to identify critical business events. To evaluate data quality, Quantum
implemented Categoric Alerts to proactively catch any data errors or omissions in tis MRP
database. The system’s notifications are now sent whenever any critical MRP data fall
outside the existing operational parameters.
The system has produced the desired results. For example, the estimated value of the
improved ordering process using the new system is millions of dollars in inventory
reductions each year. The buyers have reduced transaction tasks and costs, and both
Quantum and its buyers get a lot more information with a lot less work. Before the
implementation of Categoric Alerts, Quantum’s and analysts would search massive reports
for MRP data errors. Now that new system is implemented, exceptions are identified as
they occur. This new process has freed the analysts from the drudgery of scanning reports
and has greatly increased employee satisfaction.
Data integrity of the MRP increased from 10 percent to almost 100 percent, and Quantum
is now able to quickly respond to changing customer demand. The system paid for itself
in the first year.
Contd...

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