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SFS intec- Reduced Inventory with Improved Service

Company Overview
SFS intec is one of the world's leading manufacturers and suppliers of precision cold formed components, special fasteners and mechanical fastening systems. The company has14 plants in Europe and North America, employing 3,000 people worldwide and generating a turnover of Euro 518 million.

The UK division is based in Leeds, where fasteners have been manufactured on the site for over 100 years. A £6m redevelopment programme has resulted in a modern production and logistics facility which specialises in supplying prestigious projects. Recently the company supplied the fixings for the roof and cladding of the new Wembley Stadium as well as Heathrow's Terminal 5. SFS intec UK has a turnover of £23m and a workforce of 110 people.

INFORM's advanced planning decision support software, add*ONE 'Inventory Optimizer', was first installed into the SFS Group headquarters in Switzerland where SAP is their Enterprise Resource Planning (ERP) system. The software was then rolled out to the other divisions, including the UK who use legacy systems. Now, most of the company's divisions use the add*ONE software as a Group standard.

A Highly Complicated Logistics Process
Iqbal Bahia is the Logistics Director for the UK organisation; he takes up the story, “Having the right stock forecasting and replenishment software to enable us to operate effectively in our fast moving business environment is vital.

“Due to rising manufacturing costs, the business model in the UK has changed significantly over the past two years. Now, we are not just manufacturing but are also a key hub responsible for importing products from outside Europe for the whole of SFS intec.”

This is a highly complicated logistics process which operates a 24 hour delivery service, with 80% of orders received being sent out on the same day for next day delivery. According to the logistics management of SFS intec, although fasteners are a vital part of any building, they are often a last minute order decision which explains why almost half of the orders are scheduled for premium deliveries.

The UK operation holds £4m (8,500 skus) worth of stock in the Leeds warehouse. Some lines are imported from the Far East, USA and suppliers worldwide. Once in the UK, selected products are finished in Leeds (the UK facility specialises in moulded heads for fasteners and the painting of fasteners). On top of this, the company makes weekly, intercompany deliveries to Scandinavian countries, Germany, France, Italy and Switzerland.

There are two sales divisions: Construction Fasteners (CF) which serves the building trade and Industrial Fasteners (IF) which caters for factories and assembly lines. Product supply is different for each division. It is generally unpredictable for the CF division, with no stock held by customers and demand that is project driven. In contrast the IF division supplies demand that is production driven creating a fairly stable supply pattern.

Accurately Forecasting Demand
Handling such a complex logistics challenge requires more than a standard ERP system, particularly if the business is to perform consistently at the optimum level. The implementation of add*ONE has provided SFS intec with a sophisticated but easy to use tool that enables them to not just manage the stock processes efficiently, but optimally.

“We see inventory control as a joint ownership project that includes the logistics operation working in partnership with sales and marketing,” explains Bahia. “To accurately forecast demand we need to use historical data as well as known future initiatives that will impact on the business.

“We have the facility to programme information into add*ONE, weaving into the forecasts what we know about the market. It could be a large contract win or a change to legislation caused by green issues that are becoming increasingly important. We can also plan in suppliers' holidays so that they can be pre-calculated into the forecasts. This helps to take out potential errors, aiding the decision process and giving advance warning of modifications to the order process. INFORM's add*ONE 'Inventory Optimizer' gives us an excellent overview of our business.”

Managing Stock and Smarter Working
Ian Morgan, Logistics Manager for SFS intec UK explains how the software has improved the effectiveness of the logistics department. “The difference with the add*ONE software is that it is a best-of-breed inventory management system from INFORM, a company whose core competence is stock replenishment. In comparison, our old software system was high cost, high maintenance and unsophisticated.

“As add*ONE operates in a windows based environment it is relatively easy to use. The information is processed overnight, taking data from our ERP system. Each morning it is presented in a way that is straightforward for our six planners to understand, with graphical illustrations and priority listings. At a glance they can see where they need to take action. It also gives me an overview of their workload for the day.

“As a result the amount of time the planners spend on standard replenishment is down by 50%, they are now working smarter, managing stock rather than just ordering it. This gives them more time to move away from conventional logistics and concentrate on international projects, many of which we now lead.”

Significant Growth of the UK Business
SFS intec constantly strives to match its business offering with its customers' requirements and cites customer service as a strong business driver. Iqbal Bahia again, “add*ONE has enabled us to offer high customer service levels of 96.7% in our CF division and 99.1% in our IF division.

“It has also helped us to reduce procurement costs and manage the filling of full containers from the USA and the Far East. The amount of stock we hold here is always under the spotlight and we now have an optimised stockholding.

“With the new business model, the UK company acts as the main import hub for SFS intec in Europe. This has meant that we have been able to reduce our stockholding and phase out our old stock successfully.

“We are also able to manage stock in different locations. When the company opened new premises in Sweden it substantially increased manufacturing and storage capacity there. We were able to deal with their issues remotely from the UK, simply by logging into their local add*ONE software.”

Bahia summarises “Using add*ONE has enabled us to significantly grow the UK business while maintaining service levels. We have become the purchasing centre of excellence for SFS intec in Europe.”

Pioneering New Ways of Servicing Customers

The add*ONE 'Inventory Optimizer' can be scaled to meet the ambitious future developments planned by Iqbal Bahia for SFS intec UK, “The software allows us to operate a professional stock replenishment programme with multi-company installations.

“In future we'd like to expand to offer our customers a third party stock replenishment service. This would be a pioneering move in the industry, helping our customers by offering to do their stock replenishment on our professional platform.”

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