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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Loren Troyer & James Smith & Sean Marshall & Elan Yaniv & Sridhar Tayur & Martin Barkman & Alev Kaya & Yong Liu, 2005. "Improving Asset Management and Order Fulfillment at Deere & Company's C&CE Division," Interfaces, INFORMS, vol. 35(1), pages 76-87, February.
    • Handle: RePEc:inm:orinte:v:35:y:2005:i:1:p:76-87
    DOI: 10.1287/inte.1040.0110
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    References listed on IDEAS

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    1. Hau L. Lee & Corey Billington, 1993. "Material Management in Decentralized Supply Chains," Operations Research, INFORMS, vol. 41(5), pages 835-847, October.
    2. Uday Rao & Alan Scheller-Wolf & Sridhar Tayur, 2000. "Development of a Rapid-Response Supply Chain at Caterpillar," Operations Research, INFORMS, vol. 48(2), pages 189-204, April.
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    Cited by:

    1. Stößlein, Martin & Kanet, John Jack & Gorman, Mike & Minner, Stefan, 2014. "Time-phased safety stocks planning and its financial impacts: Empirical evidence based on European econometric data," International Journal of Production Economics, Elsevier, vol. 149(C), pages 47-55.
    2. Valerie Tardif & Sridhar Tayur & James Reardon & Reid Stines & Pete Zimmerman, 2010. "OR Practice---Implementing Seasonal Logistics Tactics for Finished Goods Distribution at Deere & Company's C&CE Division," Operations Research, INFORMS, vol. 58(1), pages 1-15, February.
    3. Mohammad Heydari & Kin Keung Lai & Xiaohu Zhou, 2020. "Creating Sustainable Order Fulfillment Processes through Managing the Risk: Evidence from the Disposable Products Industry," Sustainability, MDPI, vol. 12(7), pages 1-32, April.
    4. Susan Keene & David Alberti & Gary Henby & A. J. Brohinsky & Sridhar Tayur, 2006. "Caterpillar’s Building Construction Products Division Improves and Stabilizes Product Availability," Interfaces, INFORMS, vol. 36(4), pages 283-295, August.
    5. Sridhar Tayur, 2017. "OM Forum—An Essay on Operations Management," Manufacturing & Service Operations Management, INFORMS, vol. 19(4), pages 526-533, October.
    6. Richard Job Madapat Job & Quintin Williams Jr. & Michael Cailas & Matthew Liotine & Jim Novotny, 2021. "Evaluation of Critical Infrastructure Essential Businesses Amidst Covid -19 Using Network Optimization Models," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 12(5), pages 289-307, October.

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