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Keyfiguers,spp
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Service Parts Planning (SPP)
at Intuitive Surgical, Inc.
Dheeraj Singh,
LEARNING POINTS
� Hear how Intuitive Surgical transformed its service parts planning
with the implementation of SAP SPP Service scenarios.
� Review the solution highlights including custom developments
built to meet the business requirements.
� Review Benefits and Lessons learned
Contents
• Company Overview
• Project Objectives
• Why SAP?
• Project Overview/Implementation Details
• Implementation Timeline
• Benefits
• Summary/Lessons Learned
3
Company Overview
� Founded in 1995, IPO 2000
� 2012 Financial Results
Revenue $2.18 Billion, up 24% from 2011
Net Income - $654 Million, up 33% from
2011
$2.9 Billion in cash & investments
� ~2400 employees
~1000 field based Sales and Service team
� Approximately 450,000 da Vinci®
procedures performed in 2012
� 2585 da Vinci® System installed base as of
12/31/2012
1878 United States, 416 Europe, 291 Rest of
World
� Target Markets – Urology, Gynecology,
General, Cardiac, Thoracic, Trans oral
Surgery
4
Company Overview –Recurring Revenue Model
5
Annual Worldwide Procedures
6
Uniqueness of SPP at Intuitive
� Very high number of parts and locations
� Fast replenishment requirement
� Sporadic demand
� Low turnover but high impact
� Single / limited sourcing
ISI Confidential
Key Drivers for SPP
� Increased business volumes
� Complex Spare parts logistics
� New product introductions
� Support for older versions
� Increase in global market
ISI Confidential
Project Objectives
� Plan by exception capability
� Re-plan parts on a daily basis
� Efficiency gains in planner time
� Better future forecasting of material
needs
� Scalable for future volume
� Introduce Automation
� Better management of global inventory
locations
� Increased inventory optimization
ISI Confidential
Why SAP SPP
� Seamless Integration with other SAP solutions- Equipment, Procedures,
field returns, material movements, financial integration
� Robust and comprehensive service parts functionality &SAP’s vision for SPP
Service and its breadth of solutions
� Scalable with future IT architecture
� Stand-alone implementation of SPP
� Effective solution for Repair Vs. Buy
� Ease of Support – leverage in house SAP expertise. Develop in house
employees to support SPP SCM - SPP
ECC
CRM BI
ISI Confidential
11
SPP Solution Architecture
SPP Functionality – BOD
� Service network represented using Bill of Distribution
� Storage locations from ECC read as MRP areas based
locations in SPP
SPP Functionality – Master Data
• Master data and transaction data from SAP ECC
integrated using CIF
• Product Master Enhanced to default SPP relevant fields
• Material Stock Inventory interface enhanced to consider
inventory at special storage locations
• Supersession chain considered in the inventory chain to
add all older versions
• Repairable inventory recognized based on Split Valuation
in ECC
SPP Functionality – Master Data
� Custom program to auto create Procurement
Relationships that differ from ECC
� Order Interface enhanced to restrict based on order type
� Part substitution logic used in the order CIF
� Planned Independent Requirements from ECC CIF’d to
SPP as special demand
SPP Functionality – Forecasting
• Demand and Returns History captured based on
inventory movement from ECC - standard LIS
• Custom logic to calculate Return / repair forecasting –
standard SPP allows only demand forecasting
• Demand history realigned along supersession chain using
standard functionality
• Forecasting calculated based on standard models along
theBOD
• Custom enhancement done for applying index factor for
product / product groups
SPP Functionality – Forecasting
SPP Functionality – Inventory Planning
� Stocking levels – Safety stock and Economic Order
Quantity determined based on demand, lead times and
target service levels
� Normal distribution method used for the calculation of
stocking levels
� Custom enhancement to overwrite EOQ as 1 after it
was calculated for SS, to avoid rounding during
procurement
SPP Functionality – Inventory Planning
SPP Functionality – Distribution Planning
� Distribution Requirement planning for net demand
calculation
� SAP recommended BADI’s implemented for Repair vs
Buy determination
� Custom enhancement to suppress the requirement of
BOD / PDS in the Repair / Planner order proposals
� Planned Independent Requirements from ECC read as
Incoming receipts for demand not converted as orders
� Repair process integrated with QM process in ECC
� DRP (in SPP) and MRP (in ECC) ran together with out
any adverse effect
SPP Functionality – Distribution Planning
SPP Functionality – Distribution Planning
� Custom logic to create Planner Orders not
recommended by system
SPP Functionality – Deployment
� STO recommendations for stocking at child locations
� Pull methodology used with appropriate priority tiers
� Custom enhancement done to recognize In transit
inventory from ECC as incoming receipt using Fixed
Receipts
� Deployment program modified to suppress the impact of
substitution demand for low volume parts
� Priority Tiers implemented in a fashion to ensure demand
and SS at forward stocking locations are fulfilled from the
entry locations
SPP Functionality – Deployment
SPP Functionality – Deployment
SPP Functionality – Deployment
� Deployment integrated with Shipping Process in ECC
� Inventory transactions used instead for STO for sloc –
sloc movement
SPP Functionality – Deployment
� Custom logic to create Deployment STO’s not
recommended by system
SPP Functionality – UI
� Planners Worklist aids in approval and alerts for
exception handling
� Custom Notes functionality implemented to record
approval / rejection notes
� Cockpit modified to add custom stocking level fields
� Worklist Refresh functionality modified to adapt the
selection screen from current screen and applied to all
queries.
SPP Functionality – UI
Planner Worklist
SPP Functionality – UI
Custom Notes
SPP Functionality – UI
SPP Cockpit
Project Timeline
ISI Confidential
� Accurate forecasting of future demand
� Optimized service parts stocking resulting in reduced storage cost
� Reduced Procurement cost due to intelligent repair vs. buy
� Increased operation efficiency with system recommended Deployments
� Increase in parts availability
� Scalable to new customer facing locations
� Consideration of supersession resulting in utilization of old versions
How SPP added Value
ISI Confidential
Lessons Learned- What worked well
� Outstanding support from top management.
� Full engagement of key stakeholders.
� Entire project team –business and IT working on-site with close coordination.
� Verification of strategic planning results with actual production data.
� Rapid global implementation in six months.
� Flawless go live with concurrent SAP projects.
ISI Confidential
Lessons Learned
1. Significant learning curve for functional and technical IT resources that did not
have prior SPP experience
2. Testing with real-time data and realistic volumes that users are familiar with
flattens the learning curve
3. More testing and preparation needed for integration with all stakeholders
4. Ensure End users are trained well and use the solution extensively during testing
and pre-go-live.
5. SAP solution on Repair vs. Buy process is not mature and needs further
enhancements
6. SPP challenges planners’ operational and tactical abilities.
7. Understand and emphasize the impact of process re-engineering as a result of SPP
implementation.
ISI Confidential
What next?
1. Resolve issue around System not suggesting accurate deployment orders in case
stock goes below Safety stock for Parent location.
2. Fine-tune the recommended buy suggestions made by the tool-consider changing
parameters for parts based on attributes
3. Provide ability to use Procedure history & installed base as a leading indicator for
spare parts planning
4. Integrated Procurement
ISI Confidential
Keys to our success
It is safe to say that we would not be here without the support of partners
1. Westernacher- Primary Consulting partner
2. SAP
3. Other Consulting partner- DGN Technologies
ISI Confidential
Question?
THANK YOU FOR PARTICIPATING
Please provide feedback on this session by completing a
short survey via the event mobile application.
SESSION CODE: 1214
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