Interviews were used to look deeper into the matter, to discover issues related to everyday processes and to scan possibilities of improvement. Questions asked on the first round focused on GSS inventory structure, issues in lateral transshipments, products causing issues and improvement ideas. Questions about GSS inventory structure and improvement ideas were exactly the same on the second round so they are combined and presented on the same figures. Identical themes were repeated but varying tasks of the interviewees can clearly be seen on the richness of the given answers.
General issues in lateral transshipments focused mainly on the issues of China. China’s customs were seen as a real challenge as it typically takes about one week in the customs if everything is on correct form. Any scarcity, e.g. in documents, will result in additional delays. This was highly underlined by all the interviewees. There are also major issues when it comes to quality. Both the products and the packages are not on the required level, according to the person responsible for logistics. This has lead to use of air transports as emergency transshipments are needed. Both CDC and ADC are still based on very manual processes and lateral transshipments require lots of manual work e.g. in consolidation. On the system side, the difference of production systems also consumes resources as EDC and ADC are in different system in SAP than CDC, which was mentioned by the interviewees attending process and system development.
More task specific issues are mostly results of problems in Asia. Almost half of the interviewees mentioned that some specific items supplied from China or Asia altogether cause remarkable challenges on service performance. Inventory pooling is seen difficult by the inventory planners as information about availability from the suppliers is not on adequate level to support inventory planning.
Lacks of information extend to somewhat all the areas of stock levels, lead times and availability. This has then resulted in a stack of issues that concern all the functions of the organization. Purchaser responsible for the consolidations highlights the problems of the insufficient information. Some mention forecasting methods which do not cover e.g. customer sales campaigns and make consumption analysis impossible added to physical limitations of some items that need to be transported by sea for three months even though they are considered as emergency transshipments. Team leader logistics, invoicing and quality even says that “At the moment, no systematic stock transfers are done”. Products causing the problems are well known; escalator spare parts, especially tall profiles. Other products that cause problems in all of the distribution centers are electronics, such as circuit boards that are classified as key parts. In short, according to the interviewees the most important issues related to stock transfers at the moment are:
Quality issues of products and their packages
Insufficient information in terms of inventory pooling
Lack of coordination
These issues were mentioned almost in all of the interviews and also verified in further analyses. Development ideas concentrate particularly on stock transfers. Team leader inventory support and planning sees that to become more cost effective it is needed to standardize the actions with given models and calculations for appropriate cycles of replenishments and to improve visibility between the inventories. Most of the answers focus on these same ideas and provide ideas where to find cost savings. ADC is named to waste resources on air transports and it is said that it is needed to get rid of emergency transshipments between proactive replenishments. What connects the answers is the need to find standardized ways of working and principles whether a product should be supplied from Europe, China or both. Team leader customer service requests for “Responsible persons for periodic tasks”.
When the interviewees were asked to name changes that will, or should be performed, a wide range of answers were given. Some of the answers stated that all the inventories need to be included into the same planning system and checkups will need to be automatic. It was also said that stock transfers should be added in a reasonable pace. Tools to evaluate variations in demand caused by seasonal factors or campaigns were requested and possibilities to evaluate consumption through their life cycle. Physical characteristics were also requested to make it possible to plan transshipments. In general, interviewees saw improvement possibilities in
Inventories under one planning system
Automatic stock transfer process
Planning tools to extend forecast from statistical information to signals from the field and product life-cycles
Physical characteristics from EDMS to SAP
Introducing total cost models
At the end of the interview, interviewees were asked if there was anything else they wanted to add. One very important question emerged twice; if a supplier is decided to be moved to other continent, is it really known what are the actual consequences and costs? There are issues in processes, quality, availability and extremely long lead times with reduced agility but their costs are not known. What was surprising was the fact that customers, whose default distribution center has faced a stock-out, are not able to check
if there was stock left on another DC. The only way to do this is to ask from GSS customer service officer who has limited access to stock levels in CDC and most of the front line personnel do not even consider this possibility.
In total, issues related to stock transfers can be said to result from the difficulties of the set up of the new distribution centers in Asia. Operations have faced several unexpected difficulties because of a strategic movement implemented with a high pace. As a result of this, all the interviewees are aware of the issues in transshipments and have faced issues related to lateral transshipments in their work tasks. Lateral transshipments have become more and more important and it seems that tools and methods have not yet been developed to serve fluent and effective processes.