More Accurate Demand ProjectionsMore Accurate Demand Projections

SCI Systems Inc., a manufacturer of electronic components, believes the key to reducing inventory costs is better forecasting. To help it reduce the amount of on-hand inventory, the company has chosen analytic tools from SeeCommerce to improve accuracy in projecting demand.

The $8.7 billion Huntsville, Ala., company has used SeeCommerce technology since January to implement performance measurements that determine how close forecasts are to actual demand. Projections from SCI, suppliers, and customers are analyzed, and factories with the best track records share their results with other facilities in an attempt to reduce overall inventory. SCI has 47 factories in Asia, Europe, Latin America, and North America.

SCI's business projections are made using historic demand. SeeCommerce lets SCI match forecasts with actual demand over a one-to four-month period. "We can see not only a global forecast number, but we can drill down to customer, plant, part, and even component level," says Carl Ray, SCI's IT program manager. "We can see how forecasts play out across all factories and best practices across different regions."

SeeCommerce next week will ship a new component of its SeeChain suite of analytical and supply-chain event-management tools called SeeChain Financials. It will let companies deploy a set of metrics for determining the cost of supply-chain decisions. SCI is evaluating the software, which will be priced from $300,000 to $500,000.

The new module is a "huge improvement" over the financial capabilities of the other modules, says Ray. The new application lets him examine actual supply-chain costs, drilling down into transaction and business process costs. The other modules only let him review accounts-receivable and accounts-payable figures.

SCI has been able to reduce on-hand inventory by 5% since deploying SeeCommerce technology and expects that figure to increase to 15% by year's end. SCI has about $1.2 billion of on-hand component inventory. A 5% reduction equals about $60 million, and a 15% reduction is about $180 million.

Ray must get supply-chain managers up to speed on the software and able to act on the information it provides.