Posted by Tony Kontzer, Guest Blogger
It turns out a NetSuite-powered approach to materials
resource planning can help ensure that all students can clearly hear their teacher
and fellow students.
Lightspeed Technologies, a maker of classroom audio systems
designed to provide access for all students, has made just such a discovery.
The company, which has been running NetSuite since 2005, has applied the
emerging practice known as demand-driven
material requirements planning (DDMRP) to optimize its supply
chain. The company launched its DDMRP effort last fall, which combines
traditional MRP with distribution resource planning, lean manufacturing
practices, Six Sigma process improvement techniques and a focus on innovation.
The result has been a refinement to the supply chain that has enabled the
company to ensure optimal
inventory levels, and has better equipped it to handle seasonal trends and
new product launches.
NetSuite has proven to be a critical component. Inventory
levels have been dramatically reduced during the same period that customer
satisfaction rates have actually risen to an incredible 83 percent.
"Getting on NetSuite is one of the best things we've
ever done because we can adapt to change," said Carl Cox, executive vice
president of operations and CFO at the Tualatin, Ore.-based company, during a
session at SuiteWorld 2014 last week. In other words, the flexibility NetSuite
affords Lightspeed has enabled the company's DDMRP adoption to fire on all
According to Cox, a recent case study shows that with a
classroom audio system optimized for speech intelligibility, children are able
to hear and understand an average of 15,000 words per day compared to 10,000
without such a system That's a million words a year they're missing, creating
huge gaps in their learning experiences. In fact Lightspeed believes so
strongly in the impact its products can have that the challenge is simple: get
its classroom audio systems into as many classrooms as possible, as quickly and
efficiently as possible.
In other words, the sooner the tools reach the classroom,
the fewer words students will miss. Along those lines, Lightspeed was highly
motivated to ensure that it always has on hand everything it needs to ship out
Cox said that prior to its adoption of DDMRP methodologies,
it wasn't uncommon for the company to find itself unable to ship products
because it was out of a $10 component and unable to replenish its supply quick
enough. The company has a sales cycle of 12 to 18 months, but individual part lead
times range from four months down to a day, and orders change frequently,
placing a premium on being able to adapt quickly. With DDMRP methodologies in
place, the company is now able to identify inventory issues before they become
problems instead of having to determine the cause after shipments are
"We have changed our work from 'what' to 'why',"
he said. "Now we know what's going on."
Similarly, Cox said the company used to avoid such problems
by simply gathering as much inventory as possible to avoid parts shortages. But
that often led to the contrasting issue of excess inventory, so the company decided
to focus on optimizing its replenishment. More specifically, it wanted to stop
relying on a monthly spreadsheet as an MRP tool, and instead provide visibility
across its supply chain.
That's when Cox attended last year's SuiteWorld and learned
"We saw it as a method to completely change how we
work, and address critical supply chain issues," he said. "MRP is fraught
with forecasting errors, and what happens to most of us is we have oscillation
between having too much and too little inventory."
Lightspeed also was inspired by the success other companies
had with DDMRP. Cox cited a 99.7 percent satisfaction rate with customer
service at Unilever, while LeTourneau Technologies and Oregon Freeze Dried have
reported growth rates that are several times greater than their inventory
growth since adopting the methodologies.
Posted on Tue, May 20, 2014
by Tony Kontzer filed under