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| Case Study |
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SKU-level demand planning solution helps
Consumer Goods Company take cost out of operations |
Patni helped a
leading consumer goods company to save an estimated USD 25 million
due to improved replenishment of its multiple products across
all stock points in a multi-tier distribution system.
The Client
The client is a Fortune 50 consumer goods company. A market
leader in its business space, it has a century old tradition
of transforming innovative ideas into leading products and services.
The Challenge
The client has an assortment of about 11,000 SKU's that are
sourced from 120 locations and distributed though a strong network
of 11 warehouses and 50 distributors spread across 150 cities
in North America.
Depending on market forces and seasonal trends, there were random
fluctuations in the demand for its products. Very often, the
inventory of some of the products at the distribution centers
was either surplus or below optimum levels because of the mismatch
between actual demand and replenishment levels. This imbalance
between demand and replenishment was eroding the bottomline
of the company. Moreover, the customer service levels at each
distribution center were getting adversely affected. The problem
had assumed gigantic proportions as the client had 50 distribution
centers and a huge portfolio size of 11,000 products.
The client had deployed a stand-alone ERP, Supply Chain Management
(SCM), Transportation Management, and Order Management solutions
to support its operations. However, optimum replenishment levels
could not be determined due to non-availability of inputs like
lead time and its variation, mean demand and forecast error.
The Solution
Sensitive to the client's concern about the erosion of bottomline
and dip in service levels, Patni designed a solution that leveraged
the existing IT assets, while improving replenishment planning
at each of the 50 distribution centers.
Patni developed a demand-planning engine with a Web-based interface
that interchanged data with all the existing systems. It facilitated
'safety stock' analysis for each distribution center for a pre-determined
customer service level. The safety stock levels in turn served
as inputs to the SCM system to generate the replenishment orders.
Consequently, the company developed the capability to achieve
high customer service levels by maintaining optimum inventory
levels at all the stock points. While designing the solution,
Patni focused on fulfilling the client's expectations regarding
TCO, ROI and quicker time-tovalue.
The Technology
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Operating System - Windows 2000, Unix |
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RDBMS - Oracle |
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Programming Languages - JAVA, JSP, PL/SQL |
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O/S - MS Windows 2000 with IE 6.0 |
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Enterprise Applications - SCM, Transportation Management,
Order Management. |
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The Benefits
The solution developed by Patni helped the company to reap the following benefits:
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Annual savings of more than $25 million for the firm
in the first year alone |
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Achieved Stock replenishment rates of 98% |
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Reduction of inventory costs without compromising with
service levels |
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Absence of 'out-of-stock' instances at all the distribution
centers |
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Enhanced customer satisfaction due to order-to-delivery
cycle time reductions |
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A robust, reliable and fast system which was able to
handle future enhancements and growth. |
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