Taking an MRI of Toshiba's MRO

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Toshiba turns its supply chain inside out to make sure its MRIs and CTs are up and running 24-7.

Toshiba America Medical Systems Inc.'s diagnostic imaging products are used by hospitals, clinics, and physicians across the United States.

"We have thousands of geographically dispersed customers," notes Tom Greer. As director of services logistics for Toshiba Medical (TAMS), his team is responsible for providing parts to keep these complex systems running—and the need is great.

"A lot of our CTs (computed tomography technology) are located in trauma centers. Sometimes there is just one CT in a trauma center, so if it goes down, patients have to be diverted elsewhere," Greer says. "Having local parts available is critical."

The need for uptime is less urgent for other systems, such as X-ray machines, because hospitals may have multiple machines in place. Thus, part of Toshiba's challenge is to have in place the optimum amount of service parts inventory, which can range from screws, nuts, bolts and washers to high-tech parts that can cost more than $100,000 each.

"We stock about 25,000 part numbers in our inventory, but we have close to 60,000 part numbers in our parts master that we can special-order," Greer says.

Headquartered in Tustin, Calif., Toshiba Medical moved to optimize its logistics and supply chain in 1999-2000. "We put together a strategic plan for our services organization," Greer explains. The plan included strengthening areas that would benefit customers and yield a strategic advantage.

After analyzing the distribution network, "we identified that our network wasn't optimized, so we changed the number of warehouses, how we used them, what items we stocked in them—our entire distribution strategy," he says.

Optimizing Parts Planning

At that point, TAMS' service parts planners were making forecasting and procurement decisions using outdated systems. "Our planning tools were a limiting factor in our ability to optimize," says Greer.

The company then began searching for a service parts management software tool that would enable it to optimize parts planning and management.

The system team included representatives from logistics and IT, and a corporate representative from the Toshiba Services organization who served as a liaison between logistics and IT. The team evaluated several options before selecting Servigistics, Atlanta, in April 2002.

But that was just the beginning.

"This started as a Toshiba America project," Greer explains. "As we were making pitches for the new system up the executive ladder, our global parent issued an edict that we would better manage our inventory for service parts around the world. There became a global focus on improving service inventory performance."

Toshiba elected to implement the Servigistics solution in other regions of the world, and to make the North American implementation a pilot. That project went live in June 2003, after an 11-week implementation process. Japan then went live in the fall, and European operations began using the new system at the end of 2003.

The project team was led by John Manser, a senior program manager with Servigistics. Working with him were two Toshiba project managers: IT consultant Jim Holtman and services materials manager Mark O'Neill, who had worked closely with Greer during the selection phase and became project manager for implementation. Greer, who had played an active part in evaluating and selecting the software solution, then moved into the role of executive sponsor.

Toshiba invested in significant planning before rolling out the service parts solution. "We brought in people from around the world—Australia, Japan, Germany, and elsewhere—for global planning sessions," Greer says.

While operations people were ready to get going with the implementation, these planning sessions turned out to be well worth the time.

"We made some good decisions," he says. "For example, because we had different legacy systems in various locations, we decided to standardize the interface between the tool and our legacy systems, exporting the data into a standard flat file format," which helped to speed the implementations around the world.

The implementation phase of the project went well. It involved two efforts:

  1. Configuration— Setting up service strategy, business rules, user roles, and security.
  2. Data integration— Mapping and moving data in and out of the Servigistics tool with one or more systems through a built-in data gateway.

"The project team did a good job," Greer says. "It was the best project I've ever been part of from an IT implementation standpoint. Everybody was engaged; we all knew what we needed to do."

Data quality and consistency posed a challenge. "We thought we had good data, but discovered that much of the data was for informational purposes only, and did not drive any specific logic from a program standpoint," Greer says.

For example, the Servigistics tool would enable Toshiba to use a code to indicate how critical a part is. "In the past, the designation was informational, but now we would be using it to drive stock level recommendations, so it was critical that everybody coded the same way," he notes.

"We made it public that we would implement a culture change as part of the program," Greer says. "We clearly let our planners know before we started the implementation that life as they knew it was over, and that we were changing the way we ran the business."

Holding Planners Accountable

Today, planners are responsible and held accountable for their portions of the business, and their performance is monitored through new metrics using data generated by the Servigistics tool.

Users were involved in the change from the beginning. "We challenged them to do things differently," Greer explains.

Clear communication was a key part of the change process. "There was a lot of dialogue, and no surprises," Greer says. "We started having monthly meetings while we were implementing the Servigistics tool."

To this day, at the monthly luncheon meeting, planners present their results, such as usage, inventory levels, actual-to- planned performance, and what steps they're taking to improve it.

The new service parts management model and tool are paying off handsomely. The planning team is more productive. In addition, Greer says, "we've improved fill rates, and are ahead of plan in terms of increasing inventory turnover."

Despite the hard work, the project was energizing and fun. "The people involved in the project believed in it, and were committed to making it happen," Greer says.

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