A leading Global Lubricants Manufacturer wanted to enhance the efficacy of its Supply Network Design processes in North America by replacing their dated Planner with a powerful platform to achieve the difficult task of reducing costs while increasing their service levels simultaneously.
The complexity involved end-to-end modelling of the Supply Chain from Manufacturing to Distribution in a single step. To address the company’s challenges, an innovative approach of optimizing the Supply Chain Network was employed. The Distribution Network Planner was enhanced to incorporate all manufacturing costs consisting of Production and Material Costs and deliver end to end optimized results in a single step. This was feasible using the rhythm 2.0 platform which had the capability to quickly model the complex end-to-end Supply Chain network comprising of thousands of SKUs, multiple Customers, Warehouses and Manufacturing units with blending and packing capabilities.
Algorhythm modelled all the data relating to SKUs, Material & Production Costs, Handling Costs, Freight Costs (Factory – Warehouses – Customers), Non-linear Costs like Inventory, Warehouse Rent, etc. on rhythm 2.0.
Using the best in class rhythm 2.0 platform, the team could successfully generate the following Key Outputs :
- Optimized Total Landed Costs
- Right Linkages for transporting good between Factories – Warehouses – Customers
- Optimal Product Mix based on Total Landed Cost at each Factory
- Right Mode of Transportation on each mode based on Multi-modal capability, mode wise costs and volume discounts
- Optimal Dispatch Frequency on each lane, right trade-off between Inventory and Transportation Cost
- Minimum Volume constraint honoured at each Factory
- Right number, role and location of warehouses incl. Greenfield Warehouses, right trade-off between freight and warehouse costs.
The identification of the Key Supply Chain Drivers along with the capability to model all types of costs to mimic real life scenarios, Simultaneous Optimization of Freight & Inventory Costs, powered by the best in class rhythm 2.0 platform enabled the company to start delivering following business benefits month on month within 2-3 months of initiating the optimization exercise.
This Integrated Supply Chain Network Design approach helped the company deliver Higher Service Levels through the optimized network in a dynamic and uncertain environment.