MCA Solutions, a Philadelphia, PA company that specializes in after market service (and service parts) optimization, is still going strong despite the recent struggles of a few of its direct competitors (namely Click Commerce and Servigistics who were recently acquired by Marlin Equity Partners). If anything, the recession (although it did considerably lengthen the sales cycle) only bolstered the need for after market service (as no one could afford new equipment) and optimization thereof (as everyone is strapped for cash and every penny counts).
As I indicated in my first post on MCA Solutions and their strategic service parts management platform, many large manufacturing, semiconductor, high-tech, aerospace, defense, and oil & gas companies often have tens of millions, if not hundreds of millions, of dollars tied up in inventory in their attempts to meet specified service levels, and every dollar in inventory costs them money in overhead. Since many of these companies typically have 10% to 20% more inventory than they need, they’re tying up tens of millions of dollars in working capital needlessly as well as throwing away millions of dollars in inventory holding costs — a situation which is easily remedied by a service level optimization platform that can optimize your multi-echelon parts inventory storage network such that your contracted service levels are met but your costs are minimized. Furthermore, as per the value of after market service in a down economy, done right, this optimization will also improve cash flow by roughly 10%, reduce inventory by 15% to 50%, and even improve service levels by 5% to 20%.
Since the last time I covered MCA in depth, which was almost two years ago, they’ve made a number of significant enhancements to their platform, the most notable being flex reporting, performance management, and plan analysis. Of these, flex reporting and plan analysis excite me the most, because the former lets you construct any report you can imagine (if you’re willing to write some SQL*) and the latter lets you build, optimize, and compare as many what-if scenarios as you want, which is the (one of the) most powerful feature(s) of any good optimization platform.
Their plan analysis tool not only allows you to define your service parts strategy (fill rates, inventory/investment caps, number of echelons to consider simultaneously in stock planning, etc.) and run an analysis on that strategy (to determine total cost and inventory distribution), and not only allows you to compare one strategy against another (how much do I save by sacrificing 1% of fill rate? how does inventory distribution change? etc.), but also allows you to define a rules-based sanity check that can be run against every model and the resulting inventory solution. For example, if the inventory levels change by more than 20%, the overall investment changes by more than 10%, shortages or excesses at any location exceed pre-defined maximums, etc., the product will immediately warn you that the new model might not be an acceptable replacement over the current one. Also, each of these rules can be defined by location, SKU (or family), or segment (or lane), which gives you a lot of flexibility in your analysis and sanity checks. (Other checks can include replacement rate, forecasting model [parameters], export mode, horizon, manual overrides, time factors, intermittence, thresholds, and other relevant measures tracked and/or computed by the platform.) Furthermore, they’ve also added the ability to generate plans by Average Customer Wait Times, which is becoming important in aerospace and defense, oil and gas, and other sectors where you have equipment that can’t be unavailable for more than a very short amount of time and service (availability) levels aren’t good enough.
While we’re talking analysis, they’ve also added a new multi-period budget report which is a system generated report that is very useful as it not only calculates total forecast, condemnation forecast, repair forecast, overall metrics, TSL, average inventory position, scheduled demand, new buy, and cost across your entire operation to anywhere between 12 and 36 months in the future, but does so using a successive series of automated optimizations where the output of one period is used as the input to the next. It will take anywhere from a few minutes to a few hours to run, but it clearly allows you to see the long term effects of any change to your aftermarket service (parts) strategy.
In the next post, we’ll talk about their new performance management solution.
* Yes, I’ll admit that I’m not your average user but I have to applaud them for acknowledging their expertise is not in the creation of report builders, that no set of canned reports, no matter how extensive, will please everyone, and that the right thing to do is expose the schema and let power users do what they want — which isn’t dangerous when you also give them the ability to make as many copies (partial or full) of the database as they want and to mess around with the copies, and not the production data.