Optimization of service parts planning for InFocus

Abstract

A common problem faced by many industry companies, including InFocus, is that they are holding excess inventories and incurring unnecessary inventory holding costs yet are not able to achieve their expected customer service levels. This problem is critical to be addressed for companies who are striving to lower their supply chain costs and improve their management efficiencies. One solution to this problem is to use better forecasting methods and employ the appropriate inventory management policies. The objective of this project is to review the software package, Servigistics software tool, used by InFocus, to evaluate if it is suitable for InFocus' operations and to identify any improper practices when using Servigistics. The first step to address the problem is to review and evaluate Servigistics software package qualitatively. We found that Servigistics is a sound software tool with appropriate inventory and forecasting formulas. But the information fed into Servigistics is not accurate and up-to-date; this results in inaccurate results output by the Servigistics software. The second step is to evaluate Servigistics' output and InFocus' inventory management policy quantitatively.

(cont.) We found that InFocus has not been managing their inventory scientifically and for certain service parts, they procure excessive amounts in one shot. Approximately USD 3.8 million can be saved if InFocus manages its inventory scientifically using the current forecasting method. The major improvement comes from more discipline in their inventory management.