Like in many other companies, the product portfolio at Barco has been growing over the last few years to tap into opportunities in global markets, strengthen the competitive position, and respond to strong customer requests and rapidly evolving technological innovations. Barco is a global technology company that designs, develops, and produces networked visualization products for entertainment, enterprise, and healthcare markets. Barco's Healthcare Division offers displays that are used by medical professionals for diagnostics in mammography, surgery, and dentistry. Barco was a finalist in the 2017 Franz Edelman Competition.
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While the increased product proliferation in 2010 had a positive impact on customer satisfaction, it led to an increase in Barco Healthcare’s product and process complexity, operational costs, and R&D effort. Barco Healthcare's supply chain department suffered from high costs of obsolescence due to scrap (end of life) inventory. The high variety in components also led to increased material management and sourcing related costs, such as supplier management, purchase execution costs, less volume discounts, as well as more quality inspection costs on the incoming material deliveries. Finally, the delivery performance suffered as a result of the challenges in operations.
Barco introduced platforms in 2014 to cope with the product variety in its medical displays. The most common application of platforms is within the automotive industry. Barco’s previous attempts to implement one common platform led to excessive costs and quality deficiencies. The researchers developed operations research models to support Barco in the optimal platform configuration. These models are unique in that they include all relevant supply chain costs impacted by platforms, which makes it an objective tool that takes into account the input from marketing, sales, R&D, operations, and supply chain.
The new platform-based approach is now fully embedded in the R&D planning process. Formerly, each product was developed from scratch, but now R&D starts from the current platforms to develop new products. This new approach allows for more consistency and more reuse of components, but foremost a shorter time to market. Although it took a long time to initially develop the platforms, it enabled Barco to introduce follow-up product variants, including more features, using the same platform at a record-high pace. While keeping R&D costs stable in combination with a more efficient introduction of new products, Barco realized a material gain on gross profit and operational expenses.
Due to the commonality and reuse of components, safety stocks have so far been brought down, and an additional gain is to be expected by 2018, once the old products are phased out. Due to the shorter throughput times, roughly 5 percent of the turnover can be collected one month earlier. This leads to a working capital improvement of around half a million dollars.
Moreover, the improved product introduction time allows Barco to spread new technologies faster toward hospitals and patients. Early detection increases the survival rate by 3-4 times, and having the latest technology available in healthcare can literally save thousands of people.