Video

Supply Chain Brain at SummerCon – Karen Hogan of Southco

Video Transcription

Jean:
Hello. Today I’m speaking with Karen Hogan, Global Director of Operational Excellence at SouthCo. We’re talking about integrating a multi-echelon inventory optimization program into monthly planning. Welcome Karen.

Karen:
Thank you for having me.

Jean:
Help us understand a little about what inventory optimization is and how you’re using it at SouthCo.

Karen:
Inventory optimization is very important for us at SouthCo to better serve our customers. What we’re doing with the multi-echelon approach is we’re optimizing where we put inventory throughout our global footprint so that we can serve our customers better with better on time delivery. Using the software package allows our global planners to optimize exactly where they put that inventory. Previously we didn’t have this as a tool. This is a really great modeling tool to optimize exactly what point in the world we have that inventory to serve our customers.

Jean:
When you talk about multi-echelon you’re meaning not just your suppliers, but your supplier’s suppliers as well?

Karen:
It’s really probably more SouthCo’s total supply chain. We serve all 3 regions. The Americas, Europe and Asia. We’re really optimizing exactly where we put it within our own facilities and our distribution points. We don’t want to have it in one distribution point in a different region that might not reach a customer in another region fast enough. It’s a way to optimize exactly where to put the inventory.

Jean:
It sounds like, and I know for some companies this can be a very cumbersome process, help us understand a little better about how you have integrated this into your operational processes to make it work for you.

Karen:
Yes. We’ve done a great job in taking our information from SAP in our data warehouse, integrating it into a single server so it pulls all the critical data that we need. By optimizing that data and bringing it into the model, we can use that data for much … A lot of data for optimizing the model and figuring out exactly where to put the inventory. We built an automated system to bring the data into the model which helps out global planners tremendously. If we didn’t have the automation, we would have had to do that manually and that probably would have been almost impossible to do.

Jean:
Tell me a little more about the model. I believe you’re using a LLamasoft software for that.

Karen:
Yes. It’s LLamasoft’s Supply Chain Guru. It’s an inventory optimization software package. It’s basically, like I said, it’s used to look at our global footprint and optimize exactly where we want to put that inventory in order to serve our customers given the lead time that they give us.

Jean:
When you began this process I wonder if you found any surprises. Maybe you could tell me a few of the major changes that you made once you started working with this.

Karen:
We knew early on … We discovered early on that we needed to look at our entire portfolio of products. We could not segment them into sub-sets because of our complex supply chain. It needed to be integrated so that we could serve our customers as a whole. We couldn’t just do sub-sets. That was 1 issue we worked through and we decided to go with all of our data.

The second issue was that the algorithm for the software package was struggling because of all of our data. The Llamasoft team here improved their software package to enable us to run the model.

Jean:
Right.

Karen:
So there was 2 challenges there.

Jean:
Very interesting. Having gone through this, do you have any advice or things that you learned that you think would be good for other people looking at inventory optimization to know?

Karen:
Yeah. First of all what we did with getting the data into the model was very important because it took away the manual effort of trying to manage all the data. That was really key. It was also great to work with a model like this that could help our global planners analyze the data. Prior to this, was didn’t have this type of model so it gives us one leg up on how we’re analyzing our data and making better decisions as a result of that.

Jean:
Can you summarize for us what the benefits have been to your company and to your procedures and processes?

Karen:
We’ve improved the efficiency of our global planners. We’re also improving on time delivery to our customers, as well as improving how much inventory we actually hold globally. It’s been a cost reduction from an inventory reduction standpoint.

Jean:
Looking forward, are there any future plans that you have for rolling this out further or for implementing additional solutions?

Karen:
We’re looking … Using the same Llamasoft Supply Chain Guru software package. We’re looking at we could also optimize our network. We have a pretty stable network at SouthCo so we didn’t go there first. Most companies use network optimization first and then inventory optimization. We’re going to go back and probably look at network and how can we analyze and potentially reduce our transportation costs. That’s another avenue we’re going to seek in the future.

Jean:
Terrific. It’s a great story. I thank you for coming by to share it with us.

Karen:
Thank you very much.

Jean:
I’ve been speaking with Karen Hogan of Southco. Thank you for watching.

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