Healex Systems Limited - Supply Chain Management


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Healex Systems Limited
11 Middleton Drive
Wilmington, Delaware 19808
Mr. Mark Kozak

January 8, 2001

Dear Mark:

In early 1998 Pace, Incorporated began implementing "Lean" manufacturing techniques. One of our goals was to pull our inventory from our supply base when we truly needed it rather than our suppliers push inventory to us using traditional methods, i.e., blanket purchase orders. We began a search for an innovative supply chain management tool that would help us accomplish this. We met Healex at a Supply Chain Expo show in Baltimore in September 1999 and saw the Nocturne software for the first time. Nocturne met our requirements; easy installation, proven performance, excellent customer support and attractive economics.

We currently have 22 of our key suppliers using Nocturne to replenish raw materials to our production cells. These suppliers are using the features in Nocturne, i.e., daily ending inventory balance, daily inventory usage, lower and upper stocking limits, 26 week forecast and in transit. They are thrilled to have access to this information because it allows them to better plan their production and ship inventory to Pace only when we need it. We are building true partnerships with our suppliers because we share our daily inventory data with them. Our suppliers in turn benefit as they can more effectively schedule their production facilities. Pace's inventory turns for Nocturne supplied parts has improved from 4.5 turns to 12 in just six months. Pace has realized a $400K reduction in our inventory level for Nocturne supplied parts. In addition, since Pace has implemented Nocturne our customer service levels have increased. Nocturne helps through the entire supply chain.

Pace plans to increase the number of suppliers using Nocturne to at least 50 by the end of 2001 resulting in continued reductions in inventory levels and increased service levels to customers.

The staff at Healex has been very helpful with the implementation of Nocturne. They are an essential part of the Pace transition team to train and help our suppliers understand the benefits of using Nocturne. We look forward to working with Healex in 2001 and beyond. Thank you from all of us at Pace.

Sincerely,

Debi Marsh
Pace, Incorporated
Purchasing & Quality Manager