INDUSTRY: Medical Devices, High Tech & Electronics
JOHN GALT SOLUTION: ForecastX
Company
From its beginnings working closely with astronauts on the first missions to space to nurturing the treatment of millions of medical patients around the world today, this manufacturer of medical devices and healthcare technology has redefined the leading edge in real-time human telemetry. Over the years, the company has evolved far beyond its original missions into space. Today, its facilities in the US, UK, and Europe create patient monitoring systems for hospitals, medical clinics, and homes. The sophisticated devices acquire diagnostic telemetry and vital signs such as heartbeat, blood oxygen, and blood pressure, then translate that data into crucial clinical information needed by healthcare professionals.
Challenge
Capital equipment sales of patient monitoring stations and cardiology devices make up about 70% of the company's’ business, with the remainder coming from sales of aftermarket parts/replacement parts. In this demanding make-to-order business model, each base product can be ordered with many enhanced options and capabilities to suit the customer’s specific needs. Most sales are large orders from medical customers replacing equipment or provisioning new healthcare facilities.
The planners faced a demand forecasting dilemma that stemmed from relying on cumbersome manual methods. Their process, which involved time-consuming formula manipulations, produced forecast accuracy that hovered stubbornly between 45% and 55%. This was unacceptable for a capital equipment manufacturer with a highly configurable make-to-order business model and an explosive growth rate of 30% to 40%. The team added ForecastX from John Galt Solutions to radically improve both automation and accuracy.
Solution
ForecastX plugged into the Excel environment effortlessly, automatically applying the power of John Galt Solutions’ ProCast proprietary best-fit algorithm to detect subtle patterns within the sales data. ProCast indicated the best-fit forecasting method for each product from a spectrum of more than 25 advanced statistical approaches and algorithms. ForecastX also handled a higher level of complexity, by modeling demand calculations based on the projected impact of supply chain constraints such as electronic components shortages, disruptions in plastic polymer availability, and other factors. A healthy collaboration with sales and finance departments incorporated inputs like sales quota targets and revenue goals to create better-informed demand projections.
Benefits
After applying ForecastX to its capital equipment and aftermarket/replacement parts planning, the manufacturer’s forecast accuracy leapt by 20 points, surpassing 65%—and continues to rise in ongoing year-over-year measurements. The company’s lead supply planner praised ForecastX for being “more accurate and much less time consuming.” They attribute the extraordinary uplift in accuracy to ForecastX’s ease of use, the superior range and effectiveness of its statistical analyses, and its flexibility in quickly overlaying real-world conditions onto each base forecast. For the medical equipment manufacturer, the outcome is a familiar but supercharged Excel tool that lets planners evaluate a range of powerful statistical methods to generate prescient predictions that account for each product configuration’s real-world demand pattern and relevant influencing factors.
