Customer Success Stories
Widex reduces lead time by 50%
The world’s fifth-largest hearing aid manufacturer has optimized its supply chain. Widex has globally reduced its inventory and internal lead time while production has moved the decoupling point upstream in the supply chain.
Three years ago Widex noted excessive “noise” in the supply chain. All too often, the 33 sales subsidiaries that handle global sales were ordering extreme product quantities. As a result, production often had difficulty keeping up and stock levels were far too high. This was reflected on the bottom line.
The solution was to simplify processes and improve communication between headquarters and subsidiaries, enabling the latter to make better order forecasts and depend on the lead time.
“Production had to promise accurate lead times to get our sales subsidiaries to make better forecasts. It was simply a question of mutual trust, and, after an extensive optimization process, our goal is now in sight,” says Gustaf Høskuldsson, VP Supply Chain at Widex.
ABC analysis was a key element of the process of getting a handle on the data and synchronizing all information across the chain.
From 1,800 to 100 semi-manufactured products in stock
Widex took a bold step: After thorough analyses, production decided to upstream the decoupling point, or order point. This is the point at which production stops the manufacturing process and transfers an “almost complete” product to the warehouse. When an order is received, the product is completed according to the customer’s wishes (color, shape and so on).
By shifting the decoupling point so far up, Widex significantly reduced operational complexity and achieved a far more flexible and agile production process. Previously Widex made 1,800 different components, also known as semi-manufactures, to stock. This figure is now down to just 100.
Naturally this has freed up a large amount of capital previously tied up in stocks. Even more important, however, valuable production time is no longer spent on producing final goods that are never sold.
Forecasts depend on trust and communication
To enable headquarters to make more products to order and simultaneously improve the lead time for the sales subsidiaries, the sales subsidiaries had to provide more reliable sales forecasts.
Historically the sales subsidiaries had tended to produce widely fluctuating, over-optimistic forecasts to ensure their ability to deliver to end-customers. Widex Global changed the sales subsidiaries’ behavior by giving them a shorter, more realistic lead time.
At the same time Widex overhauled its systems to eliminate incorrect and redundant order data. Employees became far more productive, and production made the right products.
As a result, over the course of six months, lead time stabilized, stocks were reduced, and service levels improved significantly.
Create delivery reliability and bring down internal lead time between the Danish headquarters and the 33 sales subsidiaries.
Wall-to-wall process and communication upgrade at Widex Global. The decoupling point has been moved upstream, and the number of semi-manufactures reduced from 1,800 to 100.
A flexible and responsive supply chain, capable of adjusting swiftly to changes in demand.
- Service level increased from 85 to 95%
- Internal lead time reduced by 50%
- Central warehouse stocks value reduced by 20%