In today’s advanced supply chain climate, it’s never been more important to be more efficient and agile. How can you tackle current challenges with outdated inventory methods? A decade in the making, Horizon Inventory is being recognised for its unique approach to optimising supply chains. The company’s distinctive suite of tools is improving inventory levels for major Australian brands and pushing the boundaries in stock management innovation.
Horizon Inventory Director, John Allen, says the Horizon Inventory planning software is an ERP turbocharger. Most clients have multiple warehouses, even hundreds and that can translate to millions of SKU locations. Generally, Horizon Inventory’s clients have around forty to fifty thousand items. John says the company’s record was 980,000 SKUs but that was recently eclipsed with a new client.
Besides being large, the other aspect that characterises these sorts of portfolios is just how slow moving they are. Typically, one third of the products only move once within a year, and these and other slow movers can often generate more than thirty per cent of revenue and parts usage. Therefore, it is so important to handle the slow movers efficiently.
“The products we help clients manage may well be slow moving but we and they need to be fast moving to address the peculiar challenges associated with these sorts of product sets,” John says. He emphasises that you simply cannot use techniques that are more suited to FMCG type supply chains when you are dealing with slow moving items and very large ranges. “That is where the Horizon Inventory solution excels,” John says.
INNOVATION PARTNERSHIPS CRITICAL
John says Horizon Inventory excels when they partner with clients to develop new solutions that are especially suited to the challenges of slow moving product ranges.
The company has had a long term relationship with Motion Asia Pacific, formerly Inenco, the holding company for Consolidated Bearing Company, BSC Motion Technology and others.
General Manager Operations, Crispin Dobson joined Inenco a few years ago. His background was with Tier1 ERPs and similar solutions for Inventory and Supply Planning. He would often sceptically say, in regard to the Horizon Inventory system, “Oh, I bet it cannot do that” only to discover that there is much in the Horizon solution that can’t be found anywhere else.
The Horizon solution is policy and rules driven. This allows Motion Asia Pacific to avoid the need for human review and auto release nearly all their replenishments from their central DC in Melbourne to the hundreds of downstream warehouses across Australia.
The engine harnesses a lot of intelligence to make sure that the stock is put in the right place at the right time. This has allowed Motion Asia Pacific to optimise their inventory settings. They also auto-release external purchase orders for thousands of items. “This translates to significant productivity improvements and inventory savings, driving major benefits and significant capabilities for Horizon’s clients,” John says.
Easily defining support warehouses has been an attractive feature popular in the market due to Horizon’s unique solution. Mark Watson, the Motion Asia Pacific Group Forecasting and Planning Manager, came up with the idea and Horizon extended it and made it more flexible.
In the Brisbane metropolitan area, Motion Asia Pacific replenishes its branches normally from the Melbourne DC. They however have a state DC in Brisbane and have defined this as the support warehouse for the Queensland branches. So, if they do not have an item in a branch, they can call up stock from the nearby support warehouse. “This is all very easily set up through rules and the software’s modelling capabilities. You can quickly define the sweet spot that optimises service levels and inventory investment,” Mark says.
The value of having a support warehouse network running concurrently with the primary replenishment network really showed its value when Motion Asia Pacific had to respond to Covid-19. Mark was able to rapidly adjust the way their network performed, and improve cashflow and working capital utilisation, which were so critical at the nadir of the Covid-19 shock.
Mark was able to say, via rules, shift the demand for more expensive really slow moving parts from the Brisbane branches to the state DC. The parts could then be still delivered very quickly but with a two million dollar saving in Queensland alone, and millions more across Australia. “I have not come across this level of capability in any other planning software. It is easy to set up with rules and then model to confirm the right settings. The trick is to easily reassign the demand and in effect accelerate the velocity for the otherwise slower moving parts,” Mark says.
DYNAMIC SUPPLY CHAIN RECONFIGURATION
Another client, the Auto Parts Group (APG), was able to double its revenue over two years while holding its purchasing headcount and inventory levels flat. One of the features that helped was what Horizon calls Dynamic Supply Chain Reconfiguration (DSCR). APG’s parts can be very bulky and are normally best imported directly into each capital city, rather than be imported to one city and then transhipped interstate.
There are times however, especially with the very long tail of slow movers where it is smarter to nominate one warehouse as the central one, and then distribute to the others as downstream warehouses. This concept is embodied in Horizon’s DSCR solution where every item is assessed as to the best supply chain configuration to adopt, based on demand and carrying and logistics costs.
DSCR is particularly helpful with slow moving parts that have high MOQs and gives you the opportunity to evaluate the optimum supply chain. “Should you import directly into every capital city of Australia or might it be better to, for example, import to Brisbane and then use back loading rates to split the stock across the other cities?” John says. Horizon’s solution evaluates alternate supply chain configurations continually, which can help its clients run with far lower stock levels rather than being stuck with high MOQs.
“The very worst scenario is at the end of life for slow moving parts. It is all too easy to take a big profit hit and to write off the stock at end of life,” says Horizon Inventory Director, Omer Ingber. He says the Horizon solution can use Vehicle On Road data for auto industry clients to predict when the usage of parts will drop to zero. “By predicting the end of life, you can in essence predict when you really must not have any more stock of a product.”
“Rather than looking in the rear view mirror to establish what is obsolete, the Horizon capability allows you to avoid ordering the stock in the first place and genuinely gives you the opportunity to plan for zero obsolescence, that certainly makes your slow movers accelerate,” Omer says.
He highlights that it’s not only slow movers that can be made faster. Horizon’s approach is to use a rapid Proof of Concept that proves the solution while implementing at the same time. “It’s a bit like going on a date, getting engaged and getting married. It helps manage the level of investment and risk for both parties. We typically get a PoC done in 6-8 weeks but have done it in just three,” Omer says.
“The Horizon solution is developed here in Australia. We welcome the opportunity to partner with organisations that also want to be agile and really stretch the innovation boundaries.”