A Global CPG Co uses rhythm 2.0 to optimize its Supply Chain

The Problem

The customer is a Global CPG Co , their India unit was looking to optimize its Supply Chain end-to-end including Inventories at all locations, S&OP, Supply Planning and Logistic Planning. They wanted a single platform which could optimize their Supply Chain and also deal with the complexities within their plants. They had around 30 depots, 3 own plants and around a dozed third party suppliers. The customer was looking to reduce its inventory by 15%, Improve Service Levels by 5%, reduce unplanned inter-depot transfers by 30% and reduce changeovers in production lines by 20% to maximize productivity.

Key Challenges

• Identification of the key inventory drivers and suggesting optimal inventory norms which were much lower than their existing norms and delivered a better Service Level
• Optimized SKU segmentation
• Setting up the right Measurements at the depots to monitor the Improvements delivered
• Hub Spoke Model for B & C items to pool risk against Demand uncertainty
• Partial Replenishment based distribution to account of forecast errors – pull and push combination
• Ability to respond quickly to the market scenario by prioritizing dispatches based on actual consumption
• Increase in Production Frequency for all SKUs leading to a leaner production
• Mid-month Production Planning based on forecast revisions
• Demand Prioritization based on the actual sales

Solution

rhythm 2.0 Inventory, Supply, S&OP and Logistics Planning solutions were used to address the above challenges. While the set of solutions chosen were comprehensive to address a wide range of challenges, each solution modelled the details of their Supply Chain and factories adequately to generate an actionable plan. The overall flow is shown below.

1. Inventory Planner – Generated right relationship between Stock and Service Level at each location for each product based on various parameters and optimizes Inventory using multi-echelon Inventory Optimizer.

• Stock to Service Curve – Generated unique Stock to Service Curve for each product at each location based on Demand Variability, Lead-time, Review Period, Lead-time Variability, Supply Compliance, Production and Distribution Lot-sizes etc.
• Multi-Echelon Inventory Optimization – Optimized Inventory across multiple echelons and identifies the right echelon for inventory deployment for each product.
• Multi-Product Inventory Optimization – Set right service level for each Product at each location to meet the overall Service requirement. Apportions the inventory budget in an optimal manner. Automatically sets lower service targets for high volatile items.

2. Supply and S&OP Planners – Generated constrained daily, weekly or monthly production plan for all factories along with dispatch quantities to all destinations to meet the overall demand on time at lowest total landed cost of freight, material and production. Following were some of the salient points.

• Driven by Organizational Objectives. Cost optimization based allocation of Depot-SKU demand
• Delivery due date based scheduling
• Equipment Level day wise scheduling with various scheduling constraints for bulk and packing lines
• Maximization of Production Frequency based on available capacity
• Rule based algorithm to incorporate bulk and packing constraints, ensure line utilization and optimal lot size
• Ability to run constrained and unconstrained production plan
• Ability to run multiple simulation and decide on RM/PM availability, planned maintenance etc.

3. Logistics Planner -Generated distribution plan from Factories to the final delivery points through various levels within Supply Chain.

• Driven by Organizational Objectives
• Monthly outlook for planners and Depots stating expected stock arrival dates
• Dynamic linkage calculation based on future production plan; Dispatch based on future production
• Daily Schedule based on the stock availability and based on urgent demands
• Fair Share to maximize service levels
• Truck load building for optimizing the truck mix
• Suggested truck load plan based on weight/volume load-ability

Key Results

Following were some of the key improvements and results achieved.

1. Inventory Planner

• Setting up the right Measurements
• Hub Spoke Model for B & C items to pool risk against Demand uncertainty
• Identification of the key inventory drivers like production lots, demand variability etc. and instituting a continuous improvement process to deliver results

2. Supply and S&OP Planners

• Setting up the right Measurements
• Hub Spoke Model for B & C items to pool risk against Demand uncertainty
• Identification of the key inventory drivers like production lots, demand variability etc. and instituting a continuous improvement process to deliver results

3. Logistics Planner

• Setting up the right Measurements
• Hub Spoke Model for B & C items to pool risk against Demand uncertainty
• Identification of the key inventory drivers like production lots, demand variability etc. and instituting a continuous improvement process to deliver results