Legacy systems were causing inefficiencies and missed opportunities across the entire supply chain.
The two main forecasting challenges faced by the business were cultural resistance to sharing data across business units, and lots of unplanned demand.
Lack of visibility into real-time requirements and demand meant a bloated SKU count with lots of slow-moving, overly customized inventory.
With Logility, Kelly Moore can access the company’s key data from one place. This centralized approach provides better insight into trends and allows a formal product review process, which has reduced the SKU count from 770 to 430, a portfolio reduction of 44% that drives value throughout the Kelly-Moore business.
“The enhanced visibility has improved operational performance in multiple ways,” says Calvin Chun, director of planning at Kelly-Moore. “Marketing can access our data for promotion analysis, store openings and product launches, and finance can use it to improve budget planning.”
Kelly-Moore previously planned using shipment history and purchased raw materials based on historical data. There was no connection between the master production schedule and raw material purchases. With Logility, batch manufacturing is more controlled and optimized which has led to improvements in inventory turns and efficiencies in production schedules. Now capacity planning drives production plans, cadence and raw material procurement, and has even cost-justified an investment in small batch processing equipment. “Our planning efforts are much more streamlined now,” Chun says.
Improvements to manufacturing processes also help Kelly-Moore better plan product size allocation and labor allocation, and the company can now enact a two-week schedule freeze to reduce churn.
Planners previously used spreadsheets and point-of-sale data for replenishment efforts, and stores created their own orders, leading to understocks as well as obsolete items. A building project could drive a one-time 1,000-gallon sale. Prior to Logility, this might trigger reorders even though the demand would not be repeated. With Logility, Kelly-Moore implemented new standard operating procedures for stores to receive and transfer inventory, introduced a push system and changed the cycle count process, all with the goal of putting the right products in the right places at the right time.
By overhauling its warehouse-to-warehouse replenishment strategy, Kelly-Moore reduced inventory and shifted from 60% truck and 40% rail between warehouses to 5% truck and 95% rail, saving $250,000 a year.
Also, for warehouse-to-store replenishment, the company reduced overstock by 20% and avoided $1 million in purchase orders by reallocating sundries. Kelly-Moore now distributes products to stores based on customer demand forecasts, raising service level improvements to 97% and reducing finished goods inventory by 13%.
The impact of Logility is apparent across Kelly-Moore’s business, resulting in continuous process improvement and a more disciplined planning approach across departments and functional lines. “With the data that we get from Logility, we now challenge our own internal processes and say, ‘Does this make sense as a business?’ which helps us make smarter decisions with greater confidence,” says Chun.