Case Study

Manufacturer Uses Network Optimization to Improve Cash Flow and Eliminate Non-Value Added Activity

Highlights:

Objective

Eliminate non-value added transportation and warehousing activity, reduce inventory levels and improve cash flow

Solutions

Distribution Network Optimization

Results

  • 51% reduction in in-transit inventory
  • 9% reduction in ton-miles
  • 27% reduction in warehouse labor costs
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Manufacturer Uses Network Optimization to Improve Cash Flow and Eliminate Non-Value Added Activity

Challenge

A North American manufacturer shipped 45 million units to approximately 40,000 customers through a network of manufacturing and distribution sites in the U.S., Canada, and Mexico. The company instinctively knew that there was a lot of non-value added activity happening between the factory and the customer.
The manufacturer engaged LLamasoft to help reduce internal cycle time—the duration between when the finished goods depart the factory to when they ship from distribution centers. The objective was to eliminate non-value added transportation and warehousing activity, reduce inventory levels and improve cash flow to free up working capital for other projects.

Solution

Working with the manufacturer’s supply chain team, LLamasoft leveraged Supply Chain Guru and Data Guru to analyze the North American distribution system. The key was to create an ideal future-state scenario that minimized the amount of time inventory remained in the company’s possession. This would be accomplished in part by removing non-value added activities like double-counting inventory at each stage of the journey as well as optimizing the path inventory took from the manufacturer to the customer.

Results

The team summed up the results as: fewer days, fewer miles, fewer touches. However, these results needed to translate into quantifiable savings for the project to be considered a success. Here’s what they found in their review:

  • 51% reduction in in-transit inventory
  • 9% reduction in ton-miles
  • 27% reduction in warehouse labor costs

For more information on how LLamasoft can help optimize your distribution network, email us or call 866-598-8931.

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