Our client is a leader in fine chemicals, counting most of the most recognizable consumer brands in the world as its customers. During the COVID-19 crisis, suppliers started to become delayed with their deliveries due to global supply chain disruptions. Our client wanted to know what the trade-offs were of planned countermeasures. At this point, GenLots had already proven to reduce the number of deliveries by 30% and the inventory at 10% through our optimization procedures. So they turned to us as a natural provider of this vital information.
The challenge
Active in a very competitive field where maintaining healthy margins is key, our client had the following challenges:
- Increase safety parameters such as buffer safety time (time added to the theoretical lead time of a supplier). This in order to absorb the higher volatility on the supply side to make sure their customer in turn could count on them reliably
- Understand the cost of those reliability measures
Our Approach
- We were already familiar with the client’s cost structure and data. So it was quick for us to add the buffer safety times per category and simulate them
- We showed the client the impact of the reliability measures in terms of inventory and total cost over the next year on their whole portfolio
Results
The management got a clear prediction of what would happen to their inventory if they adopted the new measures. This helped also to align internally on modified KPIs given the challenging circumstances. On GenLots side, we were so surprised by how well our tool worked for that specific use case, that we decided to develop our simulator which has now been added to all our clients at no cost. There, they can simulate the effects of changing around 20 planning parameters critical KPIs such as inventories, number of deliveries, scrap, or procurement cost.
