Semiconductor manufacturer Lucent Technologies supplies computer and mobile phone manufacturers with electronic components.
In partnership with DHL operating a system called Planned Product Support, Lucent has cut lead times for sourcing raw materials from 48 to 24 hours.
Originally, the company held high levels of high-value stock including raw materials and semi-finished goods in warehouses around the world. The extended supply chain also meant holding products awaiting assembly and test by specialist subcontract test houses.
Now, JIT delivery to Lucent production lines has allowed the company to streamline operations, eliminating bottlenecks and trimming processes, such as stockholding, that did not add value. Consistent door-to-door delivery anywhere within 48 hours gives Lucent a real competitive advantage.
Meanwhile, direct distribution has cut the number of steps in the supply chain from seven to one for Eurotherm Controls, UK maker of industrial instrumentation. The company has by-passed the middle man and supplies direct to customers. A local sales agent is still responsible for service backup, but no longer holds large stocks with its attendant cost and handling problems that included unpacking, checking, configuring, storing and repacking goods.
Eurotherm’s computerised production system is integrated with DHL’s Easyship shipment processing software using the Internet to track and trace shipments. This is a highly automated production and delivery system based on JIT supply to Eurotherm’s own factory. Its benefits are improved cost and quality control and a far better understanding of customer requirements: products are now configured on the UK production line.
Delivery lead times have been cut from 24 days to five days. And additional transport costs are are almost covered simply by cutting out waste on instruction manuals. Under the old system, a manual supplied in English was thrown away and replaced with a local language version.