Optimizing the supply chain network for revenue, profit, service optimization to achieve a competitive advantage
This story is for executives who:
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Want to improve visibility and insight into supply chain and operations dynamics to achieve competitive advantage
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Want to create a digital model of the end- to-end supply chain to explore options, harmonize data across functional silos and automate decisions
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Want to understand where attention is needed and which actions have the largest impact on reaching strategic objectives
The Challenge
Despite consistent product sales by volume, one of the largest agriculture and industrial producers in the world had seen a significant reduction in profitability in North America compared to the previous year.
Lacking supply chain and operations visibility, leadership turned to Maine Pointe to help them leverage decision support tools to gain insights into how to strategically position inventory across North America and drive cultural and process change to optimize margins and achieve competitive advantage.
Analyze
This was a data rich organization, but the information resided in silos. To lay the groundwork for digital and process
evolution our team:
- Gained an understanding of the business requirements (what they needed to measure)
- Analyzed and assessed their go-to market strategies in North America
- Identified and captured existing information
- Analyzed the data and technology environment (e.g. existing technology platforms, data storage, formats etc.)
- Assessed the current level of data maturity
- Evaluated the distribution and storage network and inventory assets
- Defined goals and developed a high-level implementation plan
- Secured executive level support to move to implementation
Focus and Align
With cultural alignment and buy-in across the organization being critical to any digital and supply chain initiative, the Maine
Pointe team took the findings from the analyze phase to get focus & alignment across key stakeholders. This included:
- Agreed KPIs and total client satisfaction (TCS) criteria
- Refined and prioritized implementation plan / deliverables
- Agreed to a new collaborative approach to scenario analysis
- Validated supply & demand processes and cross functional interfaces (sales, finance, operations and logistics)
- Developed, agreed and communicated ORCI matrix to clarify Owners and Responsibilities for Inventory planning and optimization
Design, Build, Test & Refine
The next phase of the engagement was to take the key stakeholders through the digital business transformation process to design, build, test and refine using agile implementation methods. To achieve this the team:
Leveraged existing IT infrastructure to access, aggregate and validate transactional data
- Developed a single source of truth for end-to-end visibility from supply to market demand sites
- Accessed new market data sources to profile cost, infrastructure and location data
- Built dashboards to enhance visibility of the inventory across the end-to-end supply chain and operations
- Built geo-spatial capability to provide views by region and function in near real-time and for advanced analysis for long term planning
- Visualized how each business function was performing per quarter
- Modelled all existing inventory positions and capacities by location & type
This was achieved by leveraging SAP HANA’s architecture and Microsoft’s Power BI Suite. This included tapping into geocodes of all customer and inventory/distribution location and near real-time demand data around transportation and costs.
Optimization & Scenario Planning
Having helped the client understand their cost break down and own operations better, our client was then in a position to build a digital model to test different scenarios based on cost, customer, location and service levels. This enabled the company to:
- Review scenario results with the integrated business planning team and gain consensus
- Optimize the number, size and location of their distribution centers, inventory and storage locations across their network in association with where clients are located
- Demonstrate business value by using decision support tools to model, simulate, design and optimize their supply chain network for revenue/profit optimization and superior customer service
- Measured & quantified inventory optimization value improvements against initial working model levels (fill rates, realized margins, reduced positioning costs, reduced stock outs etc.)
- Tested, simulated and refined the network model and base case in collaboration with key stakeholders
- Integrated data-driven decision making with focus on governance, communication and roll down
- Rolled out the new dynamic supply chain network model capability (digital twin) and trained the client’s team to use simulation models for sustainability
- Improved strategic accuracy and agility by equipping the team to continuously run scenarios to optimize their supply chain for competitive advantage
- Run footprint optimization scenarios to optimize total landed costs (material handling, warehousing and inter-modal shipping costs)
- Refreshed dashboards utilizing latest integrated business planning datasets including sales forecasts, capacity constraints and regional pricing trends for sustainability
As a result of the engagement, the company has been able to drive measurable improvements across key parts of its supply chain network for revenue/profit/service optimization and resilience. The new agile and sustainable digital network modelling capability has positioned the company to increase tens of million dollars of EBITDA improvement and improve its competitive position in the market.
The Results
Following a proven approach from analysis to implementation of digital solutions Maine Pointe helped executives:
- Position the company to increase tens of millions dollars of EBITDA improvement and improve its competitive position in the market
- Improve efficiency, agility and accuracy by revising the strategic process with data mining, data visualization and spatial analytics
- Identify margin improvement opportunities by selling the right inventory to the best customers via the optimal distribution channels
- Review operations through near real-time visibility and insights into the dynamics of their inventory, distribution network and sales performance
- Support cross-functional alignment to improve agility, drive strategic thinking and business planning
- Equip team with a sustainable process on how to continuously model, refine and train for future scenario development and optimization
Lessons learned for other executives
- Once you have mapped all your customers, you can balance supply and demand to make smart sales decisions and pursue market segments with the most profit and growth potential
- An operations and supply chain data control tower can be created using your existing technology investments
- You need the right people, with the right training, in the right place for scenario modelling to interpret the data for actionable and measurable outcomes