British Gas has announced their planned opening of a new National Distribution Centre in Leicester during 2007 for their extensive range of gas and electrical appliance parts. The NDC is being built to cater for a continuing increase in demand and British Gas are already in discussion with Syncron, a global leader in Supply Chain Planning solutions, to plan the controlled migration of parts from their existing warehouse to their new facility.
The working relationship between Syncron and British Gas dates back more than a decade to 1995 when British Gas implemented the Syncron Murco solution to help them with the rationalization of their parts supply chain which involved the consolidation of some 12,000 SKU's from 13 Regional Distribution Centres to a single National Distribution Centre in Leicester. British Gas was able during this time to configure the Syncron system to deliver the high customer service levels (targeted at 99.4%) that the business demanded.
The Syncron Murco system remained in place until 2003. At this time British Gas were dealing with a stock range which had substantially grown to over 30,000 SKU's, and a building that was far from ideal. British Gas decided that an upgrade to the Syncron DFRP system would offer them far greater levels of parameterisation, and therefore stock control and this would assist them in managing an extension to the life of their warehouse. Annual throughput had at this point also more than doubled from the original level, to in excess of 60m.
The Syncron DFRP solution was delivered during early 2004. All of the parameters for the business were re-visited, and reset to the appropriate revised stock policy. Specifically British Gas was able to move from a system of weekly to daily review and as consequence of these changes were able to realize significant savings which were attributed to:
stockholding savings - 350k
re-parameterisation of ABC classification - 200k
amendment of service levels for the extremely slow moving stock lines - 150k
reduction in buffer stock levels of the same slow moving lines - 120K.
Peter Beer - Inventory Manager for British Gas who was instrumental in the DFRP implementation commented that in addition to these savings our annualised Stock Turn for 2004 increased from 5.8 to 7.1. We are very pleased with this ratio as our Pareto curve on usage is extremely front ended, with 3,000 lines being responsible for 90% of the throughput, and in excess of 25,000 lines having a usage of less than 1 per week.
We have a close working arrangement with the Syncron staff who work with us pro-actively to provide a high level of support and development and we are in discussion with them to further enhance our system to manage the dual warehousing scenario in respect of the controlled transfer of parts from the old to the new National Distribution Centre.