The Challenge

The utility employs over six thousand people to operate a highly diverse mix of electric power generation and distribution facilities comprising ten generation plants, a large regional nuclear power plant, and thousands of miles of transmission, distribution, and underground cable.  The utility offers an indispensable service, the continuous, reliable availability of electric power.  Service is paramount.  And key to this service is the availability of a myriad of service parts – over 250,000 of them – to keep its facilities running 24/7.

The utility launched a strategic Supply Chain Optimization (SCO) initiative to replace twenty-year-old legacy software.   IBM Maximo was selected to provide core procurement, inventory and warehouse management, and work and asset management.  Additional best-in-class capabilities would be added through the selection and integration of commercial off-the-shelf applications.  Chief among these was the Inventory Optimization system, comprising Forecasting / Demand Planning as well as Inventory Optimization functionality.  The utility pursued a comprehensive RFP (Request for Proposals) to drive its software selection.


Requirements and Smart Software Selection

Vendors were asked to respond to a broad array of functional requirements, in writing and then – by invitation – demonstrate in-person utilizing customer data.  Forecasting and Demand Planning, Inventory Optimization, and Reporting and Analytics were all considered in depth.  The requirements lists are long, but a few critical capabilities were especially important:

  • Leverage proven, built-in statistical analytics that automatically model demand and produce accurate results across all demand types;
  • Model and balance service level-driven inventory policies, across multiple locations and at multiple levels of aggregation, to produce optimal inventory stocking policies;
  • Effectively plan for intermittent demand, most critical for spare parts planning;
  • Effectively scale to automatically address planning requirements for over 250,000 discrete items;
  • Easy to learn, use, and collaborate;
  • Demonstrated ability to integrate with customers’ enterprise / supply chain management systems of choice.

Smart was selected for its performance across all of these categories.  There were, of course, some standouts.  First, during the live demonstration, Smart invited a member of the evaluation team to drive Smart Inventory Optimization.  Within a few minutes they were able to log in over the Internet, assess inventory performance of select items, identify items that were overstocked, and target optimal service levels that showed significant opportunity for inventory reduction.  This was a compelling exercise in usability.

Second, Smart’s unique treatment of intermittent demand, a patented, peer reviewed and field proven methodology, demonstrated effective and accurate service level planning, consistently achieving planned service levels on the most unpredictable parts.

And third, Smart’s demonstrated experience establishing automated integrations with our customers’ enterprise systems of choice established confidence that we would support the utility’s software solution architecture and integrate with Maximo.


Results to date

Implementation of Smart Inventory Planning & Optimization was accomplished within 90 days of project start.  Over the ensuing six months, Smart IP&O enabled the adjustment of stocking parameters for several thousand items, resulting in inventory reductions of $9.0 million while sustaining target service levels.  Significant additional savings – and improvement in service levels for critical spares – are anticipated in the coming year as stocks for additional facilities are brought into the system.


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