Kodak Tightens Supply-Chain Focus

Dec. 21, 2004
Division designs, then optimizes end-to-end view.

It's hard to dispute that manufacturers that have control over the most costly parts of manufacturing -- the supply chain -- have the key to market dominance. Yet it is not at all unusual for manufacturers to rely on haphazard "rules of thumb" -- always hold 10 days of inventory, or lowest cost equals best option, or cumbersome spreadsheets -- to make critical supply-chain decisions. That wasn't good enough for Timothy Thomas, director of process excellence at Eastman Kodak's Health Imaging Div., Rochester, N.Y. Thomas sought the ability to collaboratively design and configure the entire supply chain based on an end-to-end view. He also wanted easy-to-use optimization capabilities -- features that would give Kodak management the ability to quickly see how one supply-chain decision affects overall performance. His goal was to make it easy to optimize the tradeoffs of timeliness, cost and customer service. He turned to Marcus Ruark, CEO, Optiant Inc., Somerville, Mass. Kodak implemented Optiant's PowerChain Suite, a solution that helps companies rethink how they design the supply chain. That's where companies lock in 80% of supply-chain costs, says Ruark. The stakes: profitability, time-to-market and customer satisfaction. When the Kodak business unit transitioned from a build-to-forecast to a make-to-order model, the solution easily identified several potentially costly inefficiencies in the overall flow of product to the customer, as well as in cycle time and inventory problems. Working together, Kodak and Optiant initially rolled out PowerChain Inventory with one network of more than 15 hospitals. With heightened visibility into every stage and echelon of the total supply chain, Kodak and its hospital customers discovered where the key inefficiencies lay. The hospitals' pattern of weekly -- instead of daily -- forecasting for product need was staggering orders, thus leading to excess inventory. Also, lack of product-specific information from both the hospitals and their distributors distorted figures in inventory usage. PowerChain Inventory also helped Kodak, the hospitals and their distributors to determine the optimal levels -- and locations -- of safety stock inventory for the entire film distribution network. With these changes Kodak achieved a 67% reduction in safety stock for one hospital -- trimming six weeks of inventory held to a single week. Despite the massive inventory reduction, Kodak maintained critical customer satisfaction levels at 99%.

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