Stryker's 4-Step Inventory Reduction Process

Stryker Instruments, a manufacturer of surgical instruments, had a classic inventory problem: it wasn't able to share real-time information with its key suppliers. While its inventory levels were too high, the company was hesitant to lower them for fear of stock-outs.

Using an inventory management solution from TradeBeam Inc., Stryker instituted a new four-step process with its suppliers:

1. Stryker sets monthly minimum/ maximum targets for each part number. Suppliers are responsible for keeping inventory within the target inventory range.
2. The inventory management system gives suppliers real-time visibility into Stryker's on-hand inventory levels, forecasts, current and future production schedules, and order commitments. More than 90% of Stryker's direct material supply is now managed through the min/max replenishment process.
3. Using this data, the system helps suppliers determine how and when to ship to Stryker to ensure that inventory remains within the minimum/maximum levels.
4. Suppliers enter into the TradeBeam solution promises for future ship dates with projected quantities, and they also provide advance shipment notice (ASN) information for products shipped.

As a result, Stryker has seen a 30% reduction in direct material inventory for its manufacturing facilities in Michigan and Ireland, as well as a 30% to 40% reduction in finished goods inventory sent to Stryker distribution centers in the UK and Japan.

See Also

• Get Your Money's Worth
• M&A Scorecard
• The Toughest Software Implementation