HVAC supplier builds a more resilient supply chain with RELEX
When business is booming, there’s often little time for reflection and change. However, the need to strengthen business processes catches up sooner or later. Systemair, a global supplier of high-quality ventilation, heating, and cooling products reached this point and turned to RELEX. The company has operations in countries across Europe, North America, South America, the Middle East, Asia, Australia, and Africa.
Even before the pandemic began, Systemair recognized the need to build a more resilient and agile supply chain. The company needed a more holistic approach to running the business, including better capacity, production, and inventory planning.
Systemair’s new supply chain solution was key in enhancing their operations at the Swedish production facility, which has over 40 assembly stations and 300 workers, producing 2,500 products and managing a trading assortment of over 30,000 items. Recognizing the need for a comprehensive view of their complex operations, Systemair replaced traditional methods like spreadsheets and pen-and-paper with a modern planning system. This shift marked a significant advancement in managing supply and demand more efficiently.
Systemair recognized the need for a solution capable of planning and comparing different scenarios, especially given the increasing challenges in economic, geopolitical, and supply chain contexts. Scenario planning became a pivotal tool for addressing questions such as the impact of market changes or the introduction of new product lines on production, sales, and margins. During the pandemic, using RELEX for daily simulation of various scenarios was instrumental. This approach enabled the company to prepare effectively for potential disruptions, such as not receiving certain components as planned and focusing on informed decision-making rather than speculation.
RELEX implementation: Enhancing forecast accuracy and supply chain efficiency
Systemair selected RELEX for their agility, responsiveness, and scalability. The capability to expertly select the best forecasting algorithm for each product and location was particularly compelling. This feature enables a new level of automation, allowing for more precise and efficient forecasting across different products and locations. Systemair signed off on the project in February 2020, just before the start of the global COVID-19 pandemic.
The first goal was to improve forecast accuracy. Historically, demand planners used a simple moving average to forecast all products – regardless of the seasonality of demand patterns. The approach wasn’t ideal but was necessitated by their previous system’s limitations.
However, with RELEX, Systemair now has the capability to manage most of the demand planning process independently. This newfound agility has allowed them to shift their focus towards in-depth analysis and the effective communication of their insights within the organization. As they successfully implemented demand forecasting in their first business area, the team proceeded to integrate the supply chain optimization tool into their operations.
Systemair now utilizes supply chain optimization to create two essential plans. The first plan covers a 24-month period and focuses on capacity and critical component requirements, serving as a basis for tactical and strategic decisions. The second plan spans 18 weeks and is an operational blueprint shared with production for precise scheduling and execution. The supply chain optimization solution incorporates production capacity, staff hours, and critical component availability into these plans, resulting in high-quality outcomes that meet their needs.
Systemair has integrated the RELEX inventory optimization solution to manage their extensive inventory of over 30,000 products efficiently. This system ensures proper classification of products, distinguishing between those best suited for made-to-stock and made-to-order production. It also calculates optimal safety stock levels and order quantities for stock items.
Systemair alo wanted to enhance their Sales and Operations Planning (S&OP) process, transforming it from mere information sessions to data-driven discussions. RELEX facilitates the identification of potential issues and the proposal of alternative solutions. A reliable forecast is crucial for effective S&OP, and the company employs a statistical forecast as a baseline, refining it with market intelligence and campaign data. Additionally, the ability to generate both finite and infinite plans were highly beneficial. They created a finite capacity plan for immediate production needs and a separate infinite capacity plan to support long-term strategic and capacity planning.
Successful transformation: Realizing strategic goals with RELEX
The project has already delivered on their promise with improved forecast accuracy, inventory levels, and customer service.
With the RELEX solution, Systemair has:
- reduced inventory by 20-22%
- improved forecast accuracy above 90%.
- Increased customer service level above 90%.
The team has also implemented stock-build periods for many product groups, ensuring enough inventory going into the summer holidays and avoiding unnecessary overtime. This process allows them to have precise control over their production activities, down to the minute enabling them to respond quickly to changing conditions and demands, leading to increased flexibility and adaptability in their manufacturing operations.
RELEX has enhanced Systemair’s ability to monitor and systematically improve their forecasting performance. This technology enables the identification of reasons behind issues like excess inventory or missed orders, representing a significant advancement in supply chain management.
The project team is now exploring the possibility of expanding the use of RELEX to other regions of the business, following positive feedback from initial demonstrations. The implementation of RELEX, despite initial challenges posed by the pandemic, has led to more stable production plans and inventory levels. Systemair has observed a reduction in the extreme fluctuations that were previously common, aligning closely with their strategic goals for supply chain management.