3 CASE 1: PREFERRED SUPPLIER RELATIONSHIP FOR ELECTRICAL BULKS AND COMMODITIES - INDIANAPOLIS ELECTRIC CASE

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1 3 CASE 1: PREFERRED SUPPLIER RELATIONSHIP FOR ELECTRICAL BULKS AND COMMODITIES - INDIANAPOLIS ELECTRIC CASE 3.1 Business Case The Indianapolis Electric case study focuses on the supply chain for procuring electrical components, consisting of Eli Lilly (Lilly) as end customer, Indianapolis Electric (Indy) as contractor and Kirby Risk (Kirby) as distributor. Indy largely drove improvements in the supply relationships for Lilly projects. The intent of the study is to illustrate the efficiencies all participants in a construction setting realized by implementing one specific method of procurement of low-cost, commodity products. The goal of the study is to highlight the substantial impact that a preferred buyer/supplier partnership has had on the entire supply chain. 3.2 Background Owner establishes alliances with preferred contractors. A preferred supplier relationship between the electrical contractor and an electrical component supplier evolved to support an alliance formed between a major owner/client, a general contractor, a mechanical contractor, and an electrical contractor. From a SC perspective, the partnership is one tier removed from the alliance. The implementation of this strategic partnership involved restructuring the process for procuring nonengineered, commodity-type electrical components. This restructuring resulted in marked increases in productivity, in reduction of inventory, and in Contractor and supplier set up strategic partnership efficiencies gained in material handling. The key business issues that drove Indy to move toward a preferred supplier relationship with Kirby were the small markups and excessive chain-of-command/paper 26

2 trail required by the previous material procurement process. Consequently, after being awarded its first maintenance contract by Lilly in 1995, Indy s goal was to drive inefficiencies out of the system. Motivations for Indy to improve the system included the potential to reduce non-value adding activities and internal overhead costs, thereby reducing total costs to both Indy and Lilly. Placing inventory management in the hands of the supply chain member who is most adept at that skill allows for economies of scale and facilitates pulling resources from upstream. 3.3 Supply Chain Practice and Issues Preferred Supplier Relationship Goals In 1996, Indy realized that the best overall solution to achieve its goals was to form a preferred supplier relationship with Kirby. Indy entered into a special relationship with Kirby primarily based on its need for a local supplier capable of providing timely support for Lilly projects. Kirby was selected based on criteria including ease of ordering, timeliness, and ease of deliveries, guarantee of compliance to Lilly s strict Good Manufacturing Practices (GMP), ease of returns, and pre-negotiated pricing terms. The relationship is based on a verbal agreement only. Because each party has the right to terminate the relationship for any reason, at any time, Indy and Kirby continue to meet quarterly to discuss areas of concern and improvement. The relationship is the key factor for success. Table 3-3 shows general areas of improvement expected in the supply chain and the degree to which Indy had achieved those at the time of the case study. Table 3-3: Potential Supply Chain Improvements Potential Supply Chain Improvements (1) Minimization of waste/elimination of redundant activities Inventory reduction Focus on value to customer Reduce total system cost Focus on project delivery Just-in-time delivery Increased productivity Supplier-Managed Inventory (SMI) Improvement Achieved by Indy? (2) YES YES YES YES YES Not really YES Through the partnership, Indy and Ki b h t k t i th 27

3 Kirby have taken a step in the direction of SMI Desired Outcomes of the Preferred Supplier Relationship The key outputs of the preferred supplier relationship were (1) the restructured flow of the procurement process and (2) the virtual elimination of traditional bid negotiation by the electrical contractor. These results were made possible by empowering the foreman and changing the chain-of-command that the information flow must follow. Through the preferred relationship, Indy now relies on Kirby as a sole source supplier to complete work for Lilly, in contrast to the multiple suppliers that Indy used previously. Mutual goals of the preferred partnership between Indy and Kirby follow. 1. Reduce Non-Value Adding Activities: Due primarily to a lack of planning, Indy laborers often wasted time looking for materials or moving materials out of the way so that a specific area of work might be accessed. For these reasons, Indy chose to focus on increasing productivity, not by more closely monitoring its employees or reducing the workforce, but by simply identifying and removing any potential barriers to work. Their goal now is to pre-plan to ensure laborers are always supplied with both tools and materials to complete the task at hand. Each Indy foreman for Lilly projects completes weekly look-ahead planning of 1-2 weeks, generally to identify any custom or long lead items. For proper allocation of resources and staff, an Indy manager reviews aggregate schedules for each individual foreman. To this end, each foreman now begins the day with a brief safety meeting and a review of the plan of action for the day. The review of all tasks to be completed by all laborers for the day includes a discussion of the materials needed that day to accomplish the work. If a necessary material is not on hand, the foreman immediately begins the short procurement process and schedules alternate activities. A foreman may manage only one project or as many as ten projects at a single time. However, each foreman has an assigned crew, so that the daily safety meeting pertains to all projects. 28

4 Because only exceptionally large or custom orders take longer than usual times to process, as Kirby regularly stocks 90% of the products that Indy orders, alternate activities need not be of extremely long duration. No data was available on the effect these alternate activities may have on the sequencing of the work, but Indy and Kirby indicated that being forced to reschedule activities is an infrequent occurrence. Indy has attacked the productivity issues head-on, both by implementing lookahead planning, and by empowering all project foremen to place material orders more directly, increasing the control that individual foremen feel over their projects. In addition, each laborer is made aware of what others will be doing that day, so that logistically two workers receiving directives from different foremen will not be scheduled to work on identical tasks or in identical areas simultaneously. A qualitative effect of these planning meetings on the company as a whole involves a change in morale. When workers are allowed to see the big picture, instead of just being assigned to isolated tasks, the attitude of the group appears to change for the better. These meetings serve to allow workers to collaborate and to address any concerns they have about the project. 2. Assure only Lilly-approved Materials are Supplied: Lilly uses a pre-selected pool of 26 contractors, all of whom are familiar with and remain accountable for adhering to the strict Good Manufacturing Practice (GMP) guidelines that are followed on all its projects (GMP guidelines govern pharmaceutical, biotechnology, and other projects that must obtain Food and Drug Administration (FDA) approval as a condition for operation). This is in sharp contrast to the countless contractors that Lilly used previously, and the tedious and time-consuming approval and education process it was forced to impose on each new bidder. Because Kirby supplies a large fraction of Lilly s electrical components, it has developed internal experience with the GMP. This means that out-of-compliance supplies are avoided as a matter of course, requiring no additional effort from Indy. The catalog of Kirby components developed by Indy enables the new procurement process to insure this effortless compliance with the GMP. 29

5 3. Implement Just-in-Time (JIT) Deliveries: One primary goal of Indy is to maintain virtually no inventory. Indy currently holds approximately $20,000 in inventory at any one time, to support the projected $20M of Lilly work to be completed in By comparison, this $20,000 represents less inventory than was held to support the $1M of annual work for Lilly, prior to the formation of the preferred supplier relationship and the partnership with Kirby. The inventory consists of overstock, pending returns, and a small stock of basic electrical components, such as fittings and supports that are needed on every project. These items are typically ordered by the box so that minimal overstock is inevitable. Furthermore, by relinquishing the powers of ordering materials to the job foreman, the materials arrive on site when needed, consequently reducing the requirements for costly and cumbersome lay-down area at every job site. The new relationship has enabled Indy to place orders closer to the time when items are actually required on site, making substantial strides toward JIT. However, an average buffer of two days still exists from the time items are ordered until the delivery of items to the site. The fact that Kirby is holding substantial quantities of inventory precludes true JIT from occurring. That is, the inventory holding position has been pushed one step up in the supply chain, but inventory in the supply chain as a whole has not been reduced as JIT advocates. This area of potential optimization will be further discussed. 4. Reduce Internal Overhead Costs: When an order is placed, Kirby will routinely notify Indy if next-day delivery is not possible. Indy and Kirby then negotiate whether or not Kirby should source the item from another supplier, in which case Indy pays the additional mark-up to Kirby. All communication occurs at the field level, eliminating two previously required procurement employees at Indy s headquarters. Although it takes approximately the same amount of time for Indy to receive final payment under the new system, efficiency has increased through automation, resulting in a reduction in the overhead required to process invoices and payments. In addition, the consistency gained from processing only one invoice type from a single supplier has reduced processing times. 30

6 In 2000, Indy did $30M in volume, $15M of which was for Lilly. The projections for 2001 are $40M, including $20M for Lilly, with no increases in inventory or overhead from the previous year. Indy maintains an overhead staff of only three employees to support all Lilly projects. By transferring ordering responsibilities to foremen, Indy has alleviated the need for several full-time employees to manage the procurement process. Two project superintendents are available to review material orders from foremen (although this is not a primary responsibility), but are not billed as overhead. 5. Reduce Total Cost to Lilly: By being consistent in the materials used, Indy can easily use any overstock on the next job. Overstock typically includes only small items, such as fittings that must be ordered in bulk. Additionally, Lilly is keeping its long-term maintenance costs to a minimum as workers have only a handful of product types to maintain. As an unwritten part of the alliance contract, Indy works with Lilly to value engineer projects prior to beginning the actual work. For example, Indy installed a mock-up of a new lighting fixture, prior to final design approval of the fixture, for Lilly review and approval. The intent was to establish and maintain a standard throughout the building and the company as a whole Maps, Data, and Analysis In order to readily compare the before and after procurement states, the processes were mapped. Specific data on the pre-partnership procurement process was gathered through interviews with Indy and Kirby. The processes to be mapped incorporated key activities spanning from the time that materials are ordered until the time that the supplier is paid for those materials. Process mapping of the pre-partnership material procurement processes involved identifying all players involved at every stage of the process, all activities and the flow of materials, information and paperwork. Direct observation of the revised procurement process, from both the Indy and Kirby perspectives, enabled the mapping of the current process. Again, the focus was on who is doing what regarding the flow of materials and information. 31

7 Pre-partnership Material Procurement Process Figure 3-2 maps the procurement process that Indy used prior to forming its preferred supplier relationship with Kirby. The process involved the following basic steps: 1. Indy electrical foreman created a bill of materials. 2. Indy laborer searched existing stock at Lilly loading docks and central storage area for materials. 3. Materials were either retrieved from stock or procured through Indy Purchasing per one of three methods: either pulled materials directly from stock, sent the order to a distributor, or competitively bid. 4. Indy laborer transported materials to the job site, where materials were often stored indefinitely. 5. The invoicing process between Indy and multiple distributors was tedious and slow at best. Different suppliers meant different invoicing methods, forms and schedules. Current Material Procurement Process Figure 3-3 maps the new streamlined process, under which orders are now faxed directly to Kirby. The basic steps of the revised procurement system are: 1. The foreman creates the bill of materials for a work order then faxes the material list to Indy s main office. Indy management reviews the order then faxes to Kirby. 2. Kirby logs the order and material procurement immediately begins, either from Kirby stock or from a Kirby supplier. 3. Indy receives the order confirmation from Kirby. The order now officially becomes a Purchase Order. 4. Material is delivered to the specified Lilly dock, where a Lilly employee signs for the package and notifies the Indy foreman via a radio. 5. Within two hours, the foreman retrieves the delivery and transports the materials to the immediate work area. 6. Kirby automatically invoices Indy every two weeks. Subsequent payment occurs on a set schedule. 32

8 Figure 3-2: Material Procurement Process Prior to Indy-Lilly Alliance and Indy-Kirby Preferred Supplier Relationship 33

9 Figure 3-3: Revised Material Procurement Process between Indy and Kirby 34

10 3.3.4 Performance Assessment of Current Practice Table 3-4 compares the characteristics of the pre-preferred relationship and the revised procurement processes. Table 3-4: Characteristics of the Before and After State Procurement Processes Activity (1) Generate Bill of Materials (BOM) Determine Procurement Method Procure Materials Pre-preferred Relationship Procurement Process (2) Indy Foreman created BOM for a specific project. A laborer was sent to retrieve items on the BOM. This usually involved a long search of multiple Lilly delivery docks and the central storage area. The main problems that arose out of this system were foremen taking each other s parts and too many laborers walking around searching for parts. This problem was exacerbated by the sprawling nature of Lilly s campuses and the large number of relevant suppliers. Different suppliers imply different drivers, which results in a wide range of experience with where to deliver at Lilly. Drivers would usually deliver to the location of their last delivery, which could vary widely for supplies for a single project. The result was lacking consistency and timeliness of deliveries, and wasted man-hours. Indy s purchasing group placed the order per one of three methods: either pulled materials directly from stock, sent the order to a distributor, or competitively bid. Revised Procurement Process (3) Indy Foreman creates the BOM for a specific work order then faxes the material list to Indy s main office. An Indy Superintendent immediately reviews the order to determine if parts are on hand at the Indy office due to overstock from another project. The order is revised if necessary, then faxed to Kirby. Kirby logs the order and, usually within one hour, sends Indy an order confirmation via fax for verification, associating a price with each item and assigning an order number. As Kirby sends this fax, the materials are either already being pulled from stock to prepare the order or have been sourced from one of Kirby s 41 branch locations. Kirby s SAP system enables aggregation across all locations; trucks from each branch converge nightly on the hub in Indianapolis to cross-dock goods. The Superintendent receives the order confirmation from Kirby, and then transfers the price and the order number assigned by Kirby to the original order. The order now officially becomes a Purchase Order. The Superintendent compares Kirby s Order Confirmation to the original order placed by Indy. If a discrepancy is 35

11 discovered, Kirby is notified immediately by phone to resolve the issue prior to shipment. Deliver Materials to Job Site Invoice An Indy electrician would then retrieve the materials from either the central receiving area or the area of delivery (often hard to locate) and transport them to the job site, where materials were often stored indefinitely. The invoicing process between Indy and multiple distributors was tedious and slow at best. Different suppliers meant different invoicing methods, forms, and schedules. Material is delivered to the specified Lilly dock, where a Lilly employee signs for the package and notifies the Indy foreman via a radio. Within two hours, the foreman retrieves the delivery, verifies the items against the original order, and transports them to the immediate work area. Kirby automatically invoices Indy every two weeks. When the invoice for the materials arrives at Indy s main office, it is matched to the original order. Indy s invoicing department matches a copy of the packing slip sent to the office by the foreman with the invoice. Indy then prepares an invoice for Lilly. A typical invoice contains an Indy job number, a Lilly contract number, a Lilly work order number and the name of the Lilly engineer who originally requested the work. Lilly is sent a master invoice, a support invoice and a copy of the work order with all backup attached. Several characteristics unique to the revised procurement process are worth noting: By gaining efficiencies in transportation and material handling, both internally on specific job sites and externally in material deliveries to job sites, Indy increased utilization rates from about 20% to about 51% of an electrical tradesman s day. Kirby currently acts as a buffer for Indy s variable demand by holding inventory. Kirby maintains certain levels of stock that are automatically replenished on the basis of historical sales and demand forecasts, through its SAP system. By consolidating buffers at this single point, Indy has realized bottom-line savings, which are passed along to Lilly. As a result of the preferred supplier relationship, Kirby now delivers 70% of its orders within two days, with 98% of orders filled within five days. Since the establishment of the preferred supplier relationship between Indy and Kirby, Kirby is holding more inventory than before based on 36

12 the sheer increase in volume. Measured as a percentage, however, Kirby believes that it is holding the same percentage of inventory that it was before. Indy enjoys quick delivery of standard materials ordered from the Kirby catalog, which was assembled by Indy. However, because Indy must still make individual sourcing decisions for custom orders for Lilly as well as for other projects, high variability still exists in the lead times of these items. Inventories held by each Indy foreman act as buffers against variable demand, especially involving small maintenance projects. Each foreman stocks sufficient standard support and fitting materials for typical maintenance projects. It is important to stress that the only items held by Indy foremen are small, commodity parts, which are ordered in bulk and used on virtually all projects. The repetition of similar project types (i.e., renovation of existing office or lab space) enables Indy to estimate material demands accurately when a new project begins. Kirby and Indy meet quarterly to discuss the procurement process and to seek areas and methods of improvement. The meetings serve as a forum for drivers, order-takers and warehouse managers from Kirby, as well as Indy management, who offer an accurate idea of how the delivery process is functioning from Indy s perspective. These informal meetings have enabled the partnership between Kirby and Indy to evolve over the past seven years. Some vehicle for continuing process improvement is absolutely necessary Metrics Indy, Kirby, and Lilly have realized immediate results of their initiatives in many forms. Long-term results continue to evolve, as the process is refined. The detail-level or process metrics are not currently available. However, result metrics that describe the overall impact of the revisions are available. Both time and cost savings have been significant. Time: Table 3-5 summarizes the efficiencies in time gained through the revised material procurement process. The data was drawn from observing and evaluating cycle times, as evidenced by a paper trail, from orders placed under the previous procurement system and the revised procurement system. Due to both the automatic bi-weekly billing process 37

13 and the relationship that Indy and Kirby have established over the years, the majority of late payments are only between 0-30 days overdue. It is rare to have a payment more than 30 days overdue. It is clear from Table 3-5 that the process changes have resulted in a 30% reduction in cycle time. Activity (1) Table 3-5: Procurement Process Metrics and Values Average Activity Time Required, Pre-partnership Procurement Process (2) Average Activity Time Required, Current Procurement Process (3) Order process 6 days 2 days Receive supplier invoice 14 days 7 days Indy processing invoice 30 days 14 days Lilly processing invoice 40 days 40 days Total 90 days 63 days Cost: Table 3-6 summarizes Lilly s projected savings for 1999, as annually forecasted by Lilly. This data was provided to the researchers by Lilly; actual results were not available for comparison. The measurements, based on Lilly s past experience with Indy, highlight ongoing areas of measurable improvement resulting directly from Indy s revised procurement efforts. For 1999, the projected savings were $3.9M. Table 3-6: Projected Savings for 1999, Resulting from Indy s Reduction of Redundant Services Redundancy Eliminated (1) Savings (2) Reduce/consolidate contractor office and storage area $71,000 Delete onsite trucks of displaced contractors $33,000 Streamlined invoicing procedure (no sign-offs) $218,000 Reduction of non-value added work by Indy employees $700,000 Increased productivity of Indy employees $1,050,000 More efficient use of Lilly personnel $350,000 Reduced fee structure for alliance contractors $786,000 Procurement of material through Lilly alliances $55,000 A/E savings $624,000 Total savings $3,887,000 38

14 Win-Win-Win: Three key changes occurred almost simultaneously as a result of Lilly s issuance of a maintenance contract to Indy in 1995 and the subsequent formation of the Alliance in 1997: 1. The process of placing orders was refined by Indy and implemented at all Lilly sites. 2. Kirby s material list was standardized in the form of a catalog that was created by Indy and distributed to all foremen. 3. The delivery of orders to Lilly sites was significantly transformed by the following efforts, which occurred gradually through the continuous improvement process: Twice per day deliveries by Kirby to Lilly sites. The name of the foreman in charge of the specific project, the job number, and the purchase order number were added to each order, for ease in tracking. The Kirby delivery drivers were equipped with radios to enable them to notify the foremen of deliveries. This improvement is of key importance as Lilly has multiple campuses, each one with multiple delivery docks. Radios and fax machines were provided to all Indy foremen to enhance communication with both the central Indy office and with Kirby. The long-term effects have been the drastic reduction in inventory held by Indy, the virtual elimination of overhead and equipment maintained by Indy, and the marked productivity increases due to materials now being delivered to specific job sites. Indy has experienced a 600% increase in the volume of business it does with Kirby, from $50K in 1995 to $3M in 2000, resulting in Indy giving less work to alternate suppliers. This increase is due in part to a general volume increase that Indy has experienced and partially to the streamlined delivery methods developed by Indy. Decreased costs to Indy have been realized in many forms. By reducing the volume of inventory being held, Indy has decreased the number of storage trailers required. In addition, since Indy employees no longer leave the jobsite to procure materials or to move materials from central storage to another location, Indy now maintains only three company vehicles, fewer than maintained before. 39

15 As the customer, Lilly reports having projects completed on time and closer to budget than before the formation of the alliance. Part of the reason for this is that all prices and mark-ups are pre-negotiated, so that it is easier to make a more accurate cost estimate prior to beginning construction. It is also easier to predict with more accuracy the laborhours required for projects, since productivity has reached a more consistent level across all projects that Indy completes for Lilly. Twice per day deliveries of materials by Kirby to Lilly job sites are predictable and reduce the amount of lay-down area required on each project. Furthermore, Lilly is just beginning to experience long-term benefits such as reduced maintenance costs due to standardization of parts and the elimination of the tedious former procurement process for both maintenance and small projects. Additionally, Lilly no longer has to bid and approve new contractors each time a project emerges. Through the standardization of materials supplied, Kirby has reduced the number of items to be tracked in inventory. The elimination of the timely bid negotiation process and previously unavoidable delays caused by quotation evaluation has allowed Kirby to deliver 70% of products to the job site within two days. Kirby has increased the volume of maintenance materials it supplies directly to Lilly from $1M to $2M as a result of the name recognition the company has gained through the partnership with Indy. Also as a direct result of the partnership, the volume of work that Kirby does with Indy has changed. Due to the close nature of the two companies, Indy tends to rely on Kirby for projects with multiple customers, not just Lilly. It is important to note, however, that Indy maintains the preferred supplier relationship with Kirby only. Since the inception of the preferred supplier partnership, both Indy and Kirby have changed the way they do work for Lilly. For both companies, these changes have extended beyond the boundaries of their immediate work for Lilly, to affect relationships with other companies as well. Indy s electrical work represents 67% of the total $27M in electrical maintenance/construction projects that Lilly contracted in Indianapolis in As mentioned earlier, $20M of this $27M is completed through the alliance contract. The remaining $7M is categorized as Major Initiatives or new construction. Efficiencies gained by Indy, Kirby, and Lilly should encourage all 40

16 three companies to seek similar gains in other areas, with other allies, whether by enhancing and growing existing relationships or by forging new ones Recommendations for Further Improvement In keeping with concepts set forth in lean thinking, continuous improvement of the preferred supplier relationship and the procurement process are critical. Possibilities for improvement within the current material procurement process exist in the following areas: (Step 1) E-procurement by Indy for even more immediate processing and delivery would help to eliminate what little redundancy remains in their procurement system. If an Indy foreman were to input the material order into a palmtop, then electronically send the order to Kirby; the turnaround time to produce the order confirmation would be further reduced. Because most items ordered are out of the catalog that Indy assembled of Kirby products, prices could be automatically associated with the orders when input. Kirby would then double-check prices and reply with an order confirmation to Indy. Using this process, same-day deliveries would be feasible. Perhaps the largest benefit would be the reduction of transcription errors on the material item number, which could alter the item ordered. (Step 1) Each Indy foreman maintains a small area of central storage for all current projects, which serves as a central point for laborers to gather materials to restock their carts or to prepare for a new project. Items such as conduit, cable, wiring, hardware fasteners, and flexible cable are housed here. Most materials are stored on skids or on casters for ease of movement. Each area has a clipboard where workers can list support materials that need to be ordered, and each foreman assesses the stock approximately once a week to determine needed items. These areas are separate from the Central Storage area that Lilly employees maintain for Lilly Corporate Center maintenance projects. Because these areas are within Lilly facilities, the only costs incurred by Indy for these storage areas are the actual costs of the stored inventory itself. However, 90% of the items stored in these areas are items that Kirby regularly stocks. The current justification for each 41

17 foreman s storage area is the sprawling nature of Lilly s campuses. Ultimately, further minimization of inventories held in these small storage areas would impact bottom-line savings for Indy. (Step 3) Eliminate superintendent order review; have foreman fax orders directly to Kirby. Indy should not be holding any overstock inventory; Kirby could do so. (Step 7) Kirby could generate an invoice with the markup previously agreed upon between Indy and Lilly, to be sent directly to Lilly. Kirby currently does not aggregate materials requirements across projects. For instance, they will not pull materials off of a waiting order to include them in a rush order for another project. This may be an area for Kirby to further explore. While Kirby s management of the inventory does enable increased efficiencies through reduced lead times, the optimization of the system can only be realized if the supplier is aggregating across many projects, or in Kirby s current case, across many inventory holding areas. Opportunities exist for further optimization of material supply to Lilly job sites, in order to ultimately achieve a true JIT system. An integral part of inventory management is the electronic transfer of data over a network. Through the use of its SAP system, Kirby has the ability to manage inventory through an electronic database, but this ability has not yet been exploited. Bar coding could be implemented by Kirby for enhanced inventory management, exploited through SAP. Since the establishment of the preferred supplier relationship between Indy and Kirby, Kirby is holding more inventory than before based on the sheer increase in volume. As is often the case in the earlier stages of leaning the supply chain, inventories are being pushed back to the previous step upstream, one step closer toward raw materials. Measured as a percentage, however, Kirby feels that it is holding the same percentage of inventory that it was before. The ideal would be for Kirby to receive its inventory JIT as well, so that the effects of reduced inventory carrying 42

18 costs are realized across the entire supply chain. Kirby uses a one-week lookahead schedule to pull items from the storage area to prepare for delivery. For Kirby to receive items JIT, an accurate estimate of demand for products must first be realized. 43