Itho Daalderop set the foundation for order-driven production with slim4

The leading producer of heat pump systems, Itho Daalderop, has made the strategic decision to move away from its make-to-stock model in favour of a make to order model. Highlighting the importance of attaining high availability of the raw components Kerst Algera, Operations Director adds: “With Slim4, we are in full control. As a result, we have reduced the stocked components and spare parts by 15%.”

Itho Daalderop supplies integrated systems for sustainable heating, cooling and ventilation of homes. The company has gone through a transition in recent years, moving away from make-to-stock to make-to-order. “We supply to technical wholesalers, who also serve the installation industry from stock. From a supply chain point of view, that is not convenient,” says Algera.

The business, therefore, entered into discussions with key wholesale customers and made an important discovery: Itho Daalderop can also satisfy customer expectations with an order-driven approach as long as the delivery time remains within fourteen days. “It was quite a switch, but we have succeeded in this by modernizing and making our production lines more flexible.”

A tighter grip on components

A major challenge of the order-driven production model was that raw materials and components must always be available. However, the ERP that Itho Daalderop works with could not sufficiently guarantee this. The parts lists and spare parts cover a total of about 6,000 SKUs which are supplied by 600 different suppliers. Algera states: “Every end product is produced almost weekly. If you have to deliver within two weeks, those components really have to be there. If a part is not in stock, the entire production order cannot go through.”

Slim4 offered the perfect solution: “This has given us a grip on our components. With our ERP system, it was impossible, for example, to manage life cycles and to deal well with dynamic safety stock and variable delivery times. As a result, we often had to place urgent orders, but on the other hand, we also had a lot of obsolescence. With Slim4, we are in full control of availability and we have also eliminated our excess inventory. Since implementing Slim4, the stock has decreased by ten to 15% in just a few months.”

Reliable processes

Slim4 has brought peace to the supply chain, Algera notes with satisfaction: “The process has become far more reliable. This means that the buyers no longer have to constantly chase after suppliers. We share the purchasing forecasts that Slim4 generates, allowing them to better anticipate our requirements. Due to the economic boom, some components are currently very scarce, resulting in long delivery times. By planning inventory in Slim4 and by ordering earlier, we can still maintain availability.”

Decreased costs

Itho Daalderop no longer has to keep finished goods in stock. This means that all related logistics costs are no longer incurred. With the transition that has been implemented, the company is also ready for the future, which looks promising. The real boom for heat pumps has yet to start. “We supply via wholesalers, but we also develop propositions whereby we take on complete new construction projects or offer heating systems as a service. Our order-driven approach has made us more efficient and flexible, enabling us to respond more quickly to new market developments.”