March 11, 2005

"Year after year, Stryker Instruments does a thriving business, over $5 billion in sales a year, and $550 million in its instruments division", says Mark Lincoln, senior director of operations.

Companies of this size face corresponding size and complexity in the supply chain, and Stryker is no exception. Take inventory, for example. Part of Lincoln's job is to make sure that suppliers keep components coming in between established minimum and maximum levels.

In the past this was largely a manual job, but in 2001 Stryker contracted with a software company now called TradeBeam to automate the process.

"TradeBeam gives our suppliers real-time visibility into our inventory, forecast, and demand," says Lincoln. Armed with these metrics, suppliers keep shipments coming so as to remain within the min/max levels set by Stryker for each component.

"It lets them run their business in a flexible way as long as they keep us in the green," says Lincoln. This translates to more shipments and less inventory -- on average, 30 percent less, says Lincoln.

Saving that kind of warehouse space comes with a ton of cost savings. Also, because this aspect of the supply chain is automated, Stryker has been able to reduce headcount while actually seeing purchasing volumes go up by about 20 percent.

TradeBeam's software has worked out so well that Stryker is using it in two other ways. The first way is to manage inventory on behalf of Stryker subsidiaries in Japan and the U.K., which has resulted in a 30 percent inventory reduction in Japan and 40 percent in the U.K.

Stryker also uses the software internally, in its own manufacturing processes. "Assembly units have min/max targets, and we can make sure the units stay within them," says Lincoln. "We can see what parts are on back order. On the flip side, if they go above max, we have a problem."

Strategically, Stryker uses TradeBeam to automate as much of the supply and component manufacturing process as possible so that "We're now managing parts by exception," according to Lincoln.

"I can scan through thousands of components, filter to see which are below safety stock. I also know when shipments that'll get me above safety stock leave the supplier's facility."

Source: Line 56