1. IS Case Presentation 10-27-04 OMIS661 Dr. Chuck Downing Presented by: Jill Windelborn John Davos Mark Bonamer Mike Liotus

2. Subject Kemper Valve and Fitting Company Island Lake, IL http://www.kempervalve.com Kemper has been making pipe unions for 40 years and is best known for its line of oilfield hammer unions. However, in the past six years the company has developed new product lines specifically for the well servicing segment of the oilfield: swivel joints, pup joints, hose loops, check valves, pressure relief valves and high pressure fittings. Kemper has warehouse, sales and service offices in Houston and Alberta, a sales and service office in Oklahoma, and their headquarters is located in Island Lake, Illinois (near Crystal Lake)

4. Problem: Inventory has too many errors Bad inventory causes production to shutdown for up to a week, while warehouse is re-inventoried Inventory is inaccurate for too long (up to 1yr) large loss of $$$$$

5. Objective: Identify and correct the causes of inventory errors. Provide a quantitative measure of the level of accuracy (Attain and maintain a level of accuracy above 97%).

6. Analysis No real mechanism or system –“system” is pad of paper, pencil, calculator, fax machine –Human enters data into spreadsheet. No real training –Multiple floor locations for parts –Multiple documents for tracking usage (pick list, ship list, inventory transaction, etc) No real learning –Materials identification –Materials locations –Transaction record handling –Time allocation for the paper work

7. Solution Streamline the inventory process Train the right personnel to implement it and utilize it Make the system learn as business grows

8. Cycle Counting Method Items listed in ERP are assigned and controlled in lots Program counts the items per location.

9. What is Cycle Counting? APICS Dictionary: An inventory auditing technique where inventory is counted on a cyclic schedule rather than once a year…Effective cycle counting systems require the counting of a certain number of items every work day….to identify items in error, triggering research, identification, and elimination of the causes of errors.

10. Cycle Counting Systems Overview Cycle Counting application is one of many in evolving company intranet Location & item data is read from ERP DB in a snapshot at time of report request Sorted data is presented and combined with user input of actual location values Variance report is created, presented, & e-mailed to a company-defined recipient list History database is accessed to create weekly & monthly moving averages

11. Satellite location ERP interface - only presentation logic is transmitted to & from offices

13. Warehouse & location range selection (Company- defined ranges of ERP locations) Will soon be expanded to include Canadian facility & eventually outside agents via an Agent Internet Portal Kemper Intranet – Cycle Counting

14. After ERP data read, Cycle- Count application copies it and “owns it” Locations are sorted after data is read Repeating zero-filled locations are removed Negative locations are shown

15. Locations are completed by entering actual values & optional comments Cycle Count is then submitted for variance analysis

16. Variance report is generated & color-coded based on company-defined tolerance. Then stored & automatically e- mailed to company-defined recipients

17. Cycle Counter 1.There are 63 Cycle Count Reports, each report represents a group of locations » Finish Goods » Components » Raw Material » Warehouse Locations

18. Cycle Counter, cont. 2. Print Cycle Count Report From Intranet

19. Cycle Counter, cont. 3. Check Inventory Tags for correct Part Number, Description, and Quantity. 4.Weight Count 10% of the Total to be Counted. 5. Research and correct any errors.

20. Cycle Counter, cont. 6. When Complete, Submit Cycle Count Report 7. File Report

21. Cycle Count Analyst The analyst is informed of an inaccuracy. He attempts to discover a solution and the cause of the inaccuracy. When the Cause and Corrective Action Report is Complete the Analyst will Review it with the Supervisor(s) and the Employee(s) Who Caused the Error.

22. Future Input Mechanisms Miniature rendering of Cycle Counting application on 802.11 wireless Pocket PC Would eliminate printing of worksheet & reduce errors in double- data entry Direct barcode scanning of locations, actual Items, & quantities

23. Future -DSS Use PDA interface to direct counter to counting locations based on statistical factors, instead of sequential locations  Speeds inventory  Allows Kemper to focus on more valuable inventory or focus on trouble spots

24. Future - ES Allow input of Cause and Corrective Action Report into DB Correlate cause of error with error parameters to match possible future errors Offer possible solutions to Cycle Count Analyst for future error situations

25. Questions? / Comments ?