Improving Asset Management and Order Fulfillment at Deere & Company's C&CE Division

Loren Troyer (), James Smith (), Sean Marshall (), Elan Yaniv (), Sridhar Tayur (), Martin Barkman (), Alev Kaya () and Yong Liu ()
Additional contact information
Loren Troyer: Deere & Company, 1 John Deere, Moline, Illinois 61265
James Smith: Deere & Company, 1 John Deere, Moline, Illinois 61265
Sean Marshall: Deere & Company, 1 John Deere, Moline, Illinois 61265
Elan Yaniv: Deere & Company, 1 John Deere, Moline, Illinois 61265
Sridhar Tayur: SmartOps Corporation, One North Shore Center, 12 Federal Street, Suite 400, Pittsburgh, Pennsylvania 15212
Martin Barkman: SmartOps Corporation, One North Shore Center, 12 Federal Street, Suite 400, Pittsburgh, Pennsylvania 15212
Alev Kaya: SmartOps Corporation, One North Shore Center, 12 Federal Street, Suite 400, Pittsburgh, Pennsylvania 15212
Yong Liu: SmartOps Corporation, One North Shore Center, 12 Federal Street, Suite 400, Pittsburgh, Pennsylvania 15212

Interfaces, 2005, vol. 35, issue 1, 76-87

Abstract: In 2001, Deere's Commercial and Consumer Equipment (C&CE) Division, with growing sales of $3 billion, set out to improve its on-time delivery from plants to dealers and to reduce its inventory while maintaining customer service levels. C&CE used state-of-the-art inventory optimization techniques embedded in SmartOps' multistage inventory planning and optimization (MIPO) product to set trustworthy weekly inventory targets. C&CE used these targets, together with appropriate dealer incentives, to transform to a pull system and exceed its goals. With 2,500 dealers, 100 product families, and a 26-week planning horizon, Deere's application of multiechelon inventory optimization may be the largest example of applied stochastic inventory theory in practice in a multiagent environment. With the enterprise-wide system integration, Deere improved its factories' on-time shipments from 63 percent to 92 percent, while maintaining customer service levels at 90 percent. Between 2001 and 2003, Deere reduced or avoided inventory by $890 million, improving annual shareholder value added (SVA) by $107 million. By the end of 2004, the C&CE Division will exceed its goal in $1 billion of inventory reduction or avoidance, a year ahead of schedule.

Keywords: industries: machinery; inventory production: policies; review/lead times (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (6)

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