Implementation Plan and Recommendations

In this research we identified that DAP is currently not able to achieve a delivery speed and delivery reliability of 95%. This section contains a plan on which steps have to be taken to improve the delivery speed and delivery reliability. The plan consists of steps to take on the short term and on the long term: Steps to take on the short term

1) The organization should internally discuss if they are willing to invest in additional IT to improve the delivery speed and delivery reliability. Moreover, the organization needs to discuss what kind of additional IT they would like to implement. This research provides guidelines to

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implement additional IT that improves the delivery reliability and delivery speed. The organization could investigate which software package meets the requirements and

functionalities mentioned in this research. Moreover, since the organization employs several software engineers, DAP can choose to internally develop an inventory management tool. 2) The organization should start better registering and monitoring crucial data. The current way of

working makes it difficult to analyze the order delivery process. Data is currently often difficult to obtain and sometimes scarce. Better registering and monitoring crucial data of the sales, purchasing and order processing departments will make it easier to analyze the order delivery process and find future bottlenecks:

• The order processing department should register the delivery reliability and delivery speed for each delivered order. In the current situation it is not clearly registered what the order date, desired lead time, quoted lead time and actual delivery date of a PO are. This makes it difficult to monitor the performance regarding delivery speed and delivery reliability. It becomes easier when this information will be centrally registered.

• The purchasing department should register and monitor supplier lead times for each

received purchase order. In the current situation, the organization does not register supplier lead times. When they will be accurately registered, this can be valuable input information for the sales and purchasing departments.

• The sales department should register and monitor the arrival behavior of opportunities. The organization currently stores opportunities in CRM system Goldmine. The way they are currently registered makes it difficult to analyze the arrival behavior. It can be useful to register shifts of the expected closing date and shifts of the probability status. Moreover, it should be registered when opportunities are won or lost. This can provide valuable input information for the sales and purchasing departments.

• The order processing department should register and monitor the Bill of Materials (BOM) of all commercial off-the-shelf COTS products. BOMs contain the components from which a product is build. In the current situation, many BOMs are not yet documented or not well documented. BOMs should always be up to date and reliable such that all departments are aware of the exact product composition.

• The purchasing department should register and monitor the price specifications and MOQ of inventory components. It is important that the purchasing department is aware of all purchasing restrictions when making a choice regarding when and how much to purchase. Currently, the organization only stores a standard price in information system Minox. If the organization starts better registering and monitoring the above-mentioned data, it already creates more openness in the order delivery process for all departments, and it can therefore reduce the chance of making mistakes in managing inventory.

3) The organization should look into the results of the simulation study and check what valuable insights for the current way of working can be derived from the study:

3A) Valuable insight for the purchasing department:

o In the simulation study, we classified components based on demand scores. Category A components have a low expected demand and category B components have a high expected demand. Especially the frequently asked category B components should be monitored more frequently by the purchasing department.

o In our optimization approach we obtained sub optimal re order levels and order quantities for all inventory components. These results can be taken into account as input information to determine when purchase orders need to be placed and how much

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need to be ordered. The results are not directly applicable, since the organization currently does not have up to date overviews of inventory and has no opportunity pipeline component forecast.

3B) Valuable insight for the sales department:

o As mentioned above, in the simulation study we classified components based on

demand scores. When new opportunities arrive, the sales department should accurately monitor the inventory status of especially the frequently asked category B components. If the inventory status of one of the category B components is minimal, there is a significant chance that extra lead time needs to be quoted.

o In our optimization approach we obtained sub optimal “critical levels of quoting extra

lead time” and “quantities of extra lead time” for all inventory components. These

results can be taken into account as input information to determine when extra lead time needs to be quoted and how much extra lead time needs to be quoted. Again, the results are not directly applicable, since the organization currently does not have up to date overviews of inventory and has no opportunity pipeline component forecast. Steps to take on the long term

1) If better data becomes available, various organizational aspects could be investigated more extensively. Further research could be conducted regarding the following aspects:

• The arrival behavior of opportunities could be investigated more extensively. One could investigate if the arrival behavior differs between different types of customers or between different types of products.

• Further analyze the performance of suppliers in order to get a better insight into expected lead times and supplier delivery reliability. Perhaps, a better lead time distribution can be fit, instead of the used triangular distributions.

2) Learn how to work with the simulation model and include more accurate input data. When the organization is willing to adopt a centralized inventory management tool, the simulation model can be used to maximize the expected effectiveness of the tool. When more accurate data becomes available, experiments can be run again to explore what could be interesting

purchasing policies and due date quotation policies. For example, components can be classified using other criteria. In the simulation model, inventory components are classified into just two categories (high and low expected demand). It could be interesting to make a more

comprehensive categorization and conduct experiments to test purchasing and due date quotation strategies for the new categories. One could for instance categorize components based on factors like supplier lead time and/or buying price.

3) When the organization is willing to adopt a centralized inventory management tool, it is

important to anticipate the main risks associated with IT projects. In Section 3.2 we saw that it is crucial to anticipate technical risks, organizational risks and business risks to increase the chance of a successful IT investment. Furthermore, we identified that the organization should make sure that the IT strategy is fully aligned with business strategy. The following four components need to be balanced: Business strategy, IT strategy, Organizational Infrastructure & Processes, IS Infrastructure and Processes. The organization should take into account that all the above- mentioned aspects should be balanced in order to achieve a good business IT alignment.

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In this section, we worked out the steps that have to be taken to improve the delivery speed and delivery reliability. First, we mentioned three steps that should be taken on the short term. Thereafter, we mentioned three steps to take on the long term.