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This is no ‘bits and bytes’ job

VMI: Vendor Managed Inventory

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When customers allow you, as a supplier, to take a closer look at their processes and flow of goods, you are able to estimate what you will have to provide even before an order has been placed. That is the essence of VMI (Vendor Managed Inventory) as it has been introduced into supply chain management at Philips. Business Line Manager Sjang Selen (35) and his colleagues at Philips Lighting are responsible for initiating this. How does VMI work?

“Access to the customer’s sales and stock data is needed, so we have to create a basis for trust. That’s where it all begins. Based on this data, patterns of demand can be predicted and decisions can be made as to what has to be delivered and when. The big advantage is that you no longer have to wait for orders in order to determine your own levels of stock. The future becomes a lot clearer, you can hold lower stocks and you see less jittery fluctuation in your flow of goods. Moreover, you’re responding to customer requirements: more and more customers simply demand that we have VMI on offer.”

SAP APO
The customers referred to here are mostly retailers who sell Philips lamps all over the world – supermarkets and DIY stores in particular. Sjang Selen: “In several countries we’ve already joined up with customers in VMI projects, and we’re now going to centralize this in a single support tool. That way, Philips Lighting companies everywhere will be able to offer all their customers VMI in the same way. As a result, along with one of our business units in America, we’re currently on the point of initiating a VMI project with a really major customer. The advantage of standardization is that implementation gets faster and faster. But it will still take a couple of years until all our regular customers who are eligible actually have VMI”. The SAP component used most by Sjang and his people is SAP APO (Advanced Planner and Optimizer). “We model this system in such a way that it can regulate the customer’s flow of goods and planning.
We actually translate the company’s wishes into system solutions, and to be able to do that you have to get in really close.
That’s what I really like about my job: we become an integral part of the business. We see the flow of goods to the end consumer passing through our own system. VMI is, of course, only one of the Lighting SCM processes we support with SAP APO.”

‘IT nerds’?
In Sjang’s opinion, his department and its work still sometimes suffers from inaccurate image-forming. “Often, the work involved in this kind of business application still remains under-exposed. We’re really not a bunch of ‘IT nerds’; we’re constantly in touch with end-users, logistic partners and Philips companies in all sorts of countries. And we build the solutions they make use of. Insight into business processes is of major importance… we’re still seen as crawling around under desks fitting cables, but that has nothing to do with our work. This is no ‘bits and bytes’ job.” IT know-how is of course indispensable. Sjang Selen: “You have to know how systems react: if this is the input, what am I going to get as output? With every project, you learn more about this and you steadily acquire deeper insight into the modeling of the system. But besides that, you’re also in contact with a huge range of different disciplines. Interfacing customer data to Philips, for example, is largely a technical matter, but you also have to deal with a planner within the business – someone who has real customers on the phone on a day-to-day basis. Then we’re talking much more about training.”

Exotic requirements
Sjang’s job satisfaction also lies in the large measure of responsibility his work offers him. “You are, in fact, playing a consultancy role in that your knowledge of the system and its restrictions sometimes require you to curb your working partners’ enthusiasm. In our business, some pretty exotic demands are sometimes made, but we have to stick to a standard by which we know that the chosen solution will still be satisfactory in two or three years’ time. The process engineers in my department play an important role in this respect. They ‘own’ specific processes and they have a major say in any changes that have to be made to them.” Resilience is also necessary. Sjang: “We have to be pretty flexible. We work with customers who have their own IT department and business interests. And that means that, if they have internal problems, they may simply put you ‘on hold’ for a month. But, fortunately, that doesn’t happen very often!”

Balance
Sjang Selen: “Structural overtime is not something I expect from anyone. People need to have a certain balance in their lives – time to enjoy other things. I need that myself. But if a project deadline is approaching, I’m not best pleased if a colleague lays down his pen and heads for home at 5 o’clock sharp.” Dedication is a must but that has to be matched by support from the organization: “One of my team members has just become a father. But he’s off to the US for six months to work on a project. He has decided to use part of his compensation for overseas trips to have his wife and child visit him there. That way they can get an idea of the kind of world he sometimes works in.”

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