How a Medical Devices Supplier Saved $54,000 a Month with Better Reporting Processes
St. Jude Medical (SJM), a global medical devices company based in Minneapolis, was being bogged down each month for more than 30 hours because of the need to produce the company’s Inventory Stock Quantity and Valuation report. The process of getting this report was an embarrassment to the SJM IT Director, who have already tried different approaches to resolve the issue.
The SJM IT Director has listened to the suggestions of both his internal staff and implementation vendor. However, every approach they’ve tried didn’t solve the issue, so the director decided to look for a consulting company that specializes in SAP Data Warehouse through word-of-mouth. He found Summerlin Analytics.
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Read this case study on how Summerlin Analytics tackled the challenges at SJM.
Before Summerlin Analytics came in, just generating the Inventory Stock Quantity and Valuation report for SJM required a 15-hour downtime of the reporting systems at month-end. Yet, more often than not, the report will show an incorrect inventory valuation of $0.00. This is a business that has an annual revenue of $5.6 billion (2014).
A temporary solution was initially recommended. A complete “drop-and-reload” of the data can be done to get the report. However, this required an additional 15 hours of downtime. When you combine the number of hours that are involved in research and meetings to prepare for the downtime, it is taking the company more than 30 hours each month just to get this report. Clearly, something needs to be done.
Two generally accepted solutions have already been implemented at SJM, to little effect. These approaches are:
- Drop and reload
This was a solution that relied on building “snapshots” of inventory quantities and unit prices. The issue arises when unit prices for the next month are not yet set because it uses $0.00 as the unit price.
- Using the prior month’s valuation
The company’s preferred vendor suggested this. It uses “snapshots” from the previous month. While it reduces the downtime, it doesn’t address the cause of the issue, which is $0.00 for the value of the inventory.
Hiring an IT Consulting Firm
The internal team doesn’t have the depth of knowledge to resolve the issue, while suggestions from his implementation vendor were more like a series of breaks/fixes that don’t solve the underlying problems. The SJM IT Director bought in Hau from Summerlin Analytics to dig deeper into the process.
Summerlin Analytics discovered an external process where the company performed a monthly evaluation of their materials. This happens towards the end of every month. Crucially, the material valuation process had to be completed before the inventory valuation could begin. When this dependency was overlooked, it resulted in a report with $0.00 as the inventory stock value.
The Recommended Solution
Summerlin Analytics is a consulting firm that specializes in SAP Analytics and Data Warehousing. They understand the difference between the snapshot and non-cumulative inventory models. SJM previously only used the snapshot approach, which didn’t work for the business. The noncumulative approach offers a better solution.
The concept of noncumulative approach is challenging for most employees and contractors. It uses delta-pointers to dynamically calculate inventory quantities and valuation. With the help of Summerlin Analytics, the company was able to generate the report they needed with minimal downtime.
Implementation and Results
The finance analyst at SJM confirmed that only an approximate valuation was needed to complete the month’s books because the prices did not fluctuate significantly from month to month. During the testing phase, the interim solution allowed the finance analyst to receive the report within an hour.
For a more permanent solution, Summerlin Analytics suggested implementing the “Best Practice.” This method required three months to migrate existing reports to a more stable process and data model.
After much regression testing, the director was finally relieved from long-standing pain. The new process required zero downtime of the reporting systems (during month-end or at any other time).
In summary, the permanent solution resulted in:
- Elimination of the 15-hour load requirement (saving the company up to an additional 180 hours of downtime per year).
- Elimination of further downtime due to “drop and reload” operations (saving the company up to a further 180 hours per year).
- The IT Director no longer had to apologize for this issue to his colleagues every month
- Elimination of wasted time spent by internal staff and vendors trying to solve this recurring issue
(We estimate the cost savings to be approximately $54,000 USD or 30 hours/month * 12 months * $150/hour. This does not include the time required for issue identification, solution proposals, status meetings, or communication.)
Aside from preserving the reputation of the SJM IT Director and his team, the permanent solution, as proposed and implemented by Summerlin Analytics, allowed them to put this issue to rest and refocus on delivering value across the business.
The team at Summerlin Analytics went on to win more work from SJM and were asked to lead their European data warehouse project.
- Large consulting agencies often compartmentalize their resources, limiting their experience. As a result, a resource may offer a technical yet myopic solution through no fault of his own
- A smaller team like Summerlin Analytics, which focuses primarily on supply chain reporting have a broader understanding of business tools. Their size requires them to wear many hats (business analyst, developer, and project manager)
- A common challenge is that large companies are often busy solving their own business problems and do not have the time or resources to cultivate a network of experienced IT professionals
- Similarly, a small but highly experienced team like Summerlin Analytics are highly engaged with project delivery but do not have the bandwidth to promote their expertise.
- Hindsyght is the platform that connects these two groups which can then mutually benefit from their business relationship
IT challenges in business can be solved quickly and cost-effectively with the help of consulting firms that specializes in functional proficiencies.
Hindsyght has a comprehensive list of IT consulting firms that specialize in ERP systems, CRM systems, mobile app development, and cybersecurity, among many others. Our platform makes it easy for companies like SJM to get the expertise they need.
Browse Hindsyght to find the right IT consulting firm for your business today.
Summerlin Analytics is a consulting firm that specializes in SAP Analytics and Data Warehousing. We're the team that well-known agencies would call when reporting projects need an expert hand. Past customers include Walt Disney, Sony Pictures, Oakley, and St. Jude Medical.https://summerlinanalytics.com/ | LinkedIn | Facebook |