Supply chain as a competitive advantage
Supply chain management had been viewed by the company for many years as an administrative function.
The company struggled with disparate and limited demand data. Several brands and products were not forecasted at all, and short planning horizons made it difficult to achieve strategic targets.
Lost sales were primarily due to out-of-stock conditions.
A handmade Fender guitar takes 28 days on average to complete, and for a custom product there are up to 15,000 options.
Fender set out to build a more responsive supply chain, with a goal of end-to-end visibility and a comprehensive plan to drive and measure its global performance. Specific goals included: improve forecast accuracy, gain control of inventory, identify and minimize capacity constraints, and balance supply and demand profitably. The first step was to build a foundation with a fundamental demand plan, on top of which to synchronize all other processes.
Fender turned to Logility to meet its total supply chain requirements: real-time forecast results, direct visibility of impact to sales from supply constraints, easy integration with SAP, and ultimately a user-friendly solution that would be up and running quickly.
“Logility has made Fender’s complex supply chain simple to understand and easier to balance in order to ultimately meet our customers’ needs. Everyone ‘gets it’. With the flexibility and control afforded by Logility, we are all on the same page as to where our business is going and where our opportunities are,” notes the senior vice president of supply chain at Fender.
Quick implementation and business user training were fundamental to Fender’s success. An efficient on-boarding process was established in the first six months. “We listened and learned from the experts. The Logility team gave us situational recommendations based on experience. They made a significant effort to learn our business needs and focus on what was important to Fender, and how to apply Logility to solve our challenges,” says the senior vice president. Fender saw an almost immediate return on investment; ROI was achieved in the first six months, much faster than was planned. “From a resource perspective, Logility is also very cost-efficient to support. Any increase in resources is to support company growth, not administration of the supply chain. With Logility, we have been able to expand our business not only via organic growth but also through acquisitions, and easily meet the needs of new divisions, products and markets,” the senior vice president explains.
Through market fluctuations, Fender’s supply chain remains responsive and flexible. The company is able to anticipate changes and react strategically. The results are impressive: Fender increased service by 50% and doubled finished goods inventory turns. The company also has boosted forecast accuracy for key products and reduced inventory while improving revenue. With Logility, Fender has the ability to see what changes from one week to the next in the context of its strategic plans. With this visibility, Fender has gone from its previous 12 decision points to more than 52 decision points a year.