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Using Supply Chain Design on an Operational Level

By Mike Bucci  July 22, 2015

Supply chain design technology has been fairly widely accepted as a key piece of any high level supply chain strategy, driving improvements in cost, service and sustainability. However, more and more organizations are seeing its value on a tactical and operational level and are benefiting from major savings as a result.

One major recycling broker was dealing with over 100,000 pounds of recycled materials every week. With thatvolume of product, it was increasingly complex to optimally match the supply with customer’s demand. Having two different customer bases, the organizations that the recycler buys that materials from, and the organizations that the recycler sells the materials to, the modeling team also had to take into account the various “grades” or product, as some buyers would accept a lower grade of the materials that other buyers. The processes of buying/selling/hedging commodities coupled with fluctuating demand of a given material meant the recycler was facing an increasingly complex supply chain.

While up until this point, the recycler had been using its own internal system to match supply and demand each month, they recognized the need for a more sophisticated and user-friendly tool. They selected LLamasoft’s Supply Chain Guru as their modeling tool-of-choice. First they ran a baseline model of their current-state network to validate Supply Chain Guru’s ability to capture all of their unique costs, constraints and business rules, and match the solution from the current tool. With the confidence of the tools capability, the model updates were automated from several input tables to run the model and have output reports in less than an hour – much faster than previously possible. Secondary scenarios were often run to evaluate strategic and tactical planning considerations for the overarching strategy. The recycler ran the models on a month-to-month basis to better match their supply and demand and plan accordingly.

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Since implementing their use of Supply Chain Guru the recycler has uncovered significant savings. They are also able to capture much more data to assist in changes to their strategy than they could previously with their internal tool. Additionally, as Supply Chain Guru offer flexible scenario capabilities, the recycler has been able to quickly and easily evaluate the impacts of new suppliers, new customer and new transportation modes.  These small but regular modifications to their network that can result in major savings including more efficient sourcing decisions and decreases in unnecessary expenditures. These operational level adjustments have made positive impacts that can be felt throughout the enterprise.

To learn how many of the world’s largest and most successful companies are utilizing supply chain design technology both in terms of long-term strategy and on a day-to-day operational level, check out our “10 Tips for Elevating Supply Chain Design from a Project to a Differentiating Business Process” Ebook.