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Philips Lighting moves to a demand driven supply chain network
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With six manufacturing facilities and ten regional distribution centers, Philips
Lighting manages around 75,000 to 100,000 active SKU plant combinations.
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- Based on a traditional "push" inventory replenishment strategy Philips Lighting
was experiencing an over-supply and over-manufacture of products
- While Philips' "push" model should have produced recommended orders for the production
facilities for up to two weeks, these orders actually covered up to six months of
safety stock
- There was little visibility into its broader network for re-distribution of products
required to meet varying customer demand
- Supply and production constraints, coupled with warehouse space constraints had
to be taken into consideration with regards to replenishment
- Needed insight into holding stock methods
- Use JustEnough as part of a refined ‘hub and spoke’ replenishment methodology
- Overhaul current process to achieve optimal levels of inventory, improve existing
customer service levels, increase overall sales
- Use JustEnough to dynamically determine the required levels of safety stock that
were needed in order to meet surplus demand
- Incorporate supply, production and warehouse space constraints in inventory planning
- Pool excess inventory at multiple regional distribution centers
- JustEnough enabled Philips Lighting to move to a demand driven supply chain network
- With a 12-month rolling forecast of inventory, inventory distribution and replenishment
is now planned on a national scale
- Safety stock can be calculated on a statistical basis
- Replenishment to the distribution centers can be postponed until a "pull" signal
is sent to the hub
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