Case Study #1 – Valve Manufacturer – Supply Chain Network Optimization
Supply chain network optimization is a critical process for businesses in the industrial sector. The industrial sector encompasses a wide range of industries, including manufacturing, construction, mining, and energy production. In this case study, we will examine how a valve manufacturing company optimized its supply chain to improve efficiency, reduce costs, and increase customer satisfaction.
The manufacturing company in question produces flow control valves and valve components for a global customer base. Our client’s supply chain was complex, with suppliers located around the world, multiple manufacturing facilities, and various distribution channels. They faced several challenges in managing their supply chain, including:
Long lead times for raw materials and components due to their sourcing from various suppliers.
High inventory levels due to large order quantities, long lead times, and low forecast accuracy.
Transportation and logistics issues, such as delays and increased costs due to inefficient routing.
To address these challenges, Marex initiated a supply chain optimization project. The project involved the following steps:
Step 1: Assessing the Current Supply Chain
Marex first conducted a comprehensive analysis of our client’s supply chain to identify inefficiencies, bottlenecks, and areas for improvement. This included mapping the entire supply chain, identifying the key suppliers and their performance metrics, and reviewing the manufacturing and distribution processes.
Step 2: Designing a New Supply Chain
Based on the analysis, we developed a new supply chain design that aimed to reduce lead times, lower inventory levels and improve transportation and logistics. This involved:
Identifying new suppliers and consolidating the supplier base to improve procurement efficiency and reduce lead times.
Implementing advanced forecasting techniques to improve demand planning and reduce inventory levels.
Improving transportation and logistics by optimizing the routing of raw materials and finished products, reducing transit times, and lowering transportation costs.
Step 3: Implementing the New Supply Chain
We implemented the new supply chain design in a phased manner. The first phase involved testing the new design in a few pilot facilities and analyzing the results. Based on the success of the pilot, the new design was gradually implemented across all facilities.
Step 4: Monitoring and Continuous Improvement
Marex continuously monitored the new supply chain design and made adjustments as needed to further optimize the process. This included refining the forecasting techniques, identifying new suppliers, and improving logistics and transportation.
The supply chain optimization project yielded significant benefits for the company. These included:
Reduced Lead Times: The new supply chain design reduced lead times for raw materials and components by up to 30%, enabling the company to respond quickly to changes in demand.
Lower Inventory Levels: Advanced forecasting techniques and optimized supply chain design reduced inventory levels by up to 25%, resulting in lower carrying costs and higher efficiency.
Improved Transportation and Logistics: The new supply chain design improved transportation and logistics by optimizing routing, reducing transit times, and lowering transportation costs by up to 20%, or in this case, more than $2.3MM.
Improved Customer Satisfaction: The new supply chain design resulted in faster order fulfillment, lower inventory levels, and higher product quality, leading to higher customer satisfaction.
The supply chain network optimization project helped the manufacturing company to improve efficiency, reduce costs, and increase customer satisfaction. The project was successful because it involved a comprehensive analysis of the current supply chain, a well-designed future-state supply chain, a phased implementation approach, and continuous monitoring and improvement.
Case Study #2 – Building materials distribution client implements a TMS System
Marex was approached by a building materials distributor to vet, identify and procure a TMS that would fit well with their operation. This client has a domestic network of warehouses and distribution centers, and they operate a fleet of trucks to transport their products to customers across different regions. They recognized that their logistics operations could be more efficient. They were experiencing increased costs and longer delivery times.
Before implementing the TMS, the company’s operations were highly manual, relying upon Microsoft Excel spreadsheets for load planning and dispatching. The dispatchers would receive an order from a customer via text, phone, or email. They would manually create a shipment order and allocate a truck for transporting the goods. The dispatchers would also have to manually communicate with carriers, by phone or text, to schedule pickups and deliveries, leading to delays, errors, and inefficiencies. The company lacked real-time visibility into its supply chain process, making it challenging to manage its logistics operations and optimize its dispatch process.
The implementation of the TMS system was a significant change for the company. Marex co-implemented the system and helped them to configure and customize it to their specific operation. The TMS system enabled the company to centralize its logistics operations, providing real-time visibility into its supply chain process.
The first step in the implementation process was to integrate the TMS system with the company’s existing Enterprise Resource Planning (ERP) system. This allowed our client to pull all the order data, inventory data, and customer data into one system, providing a single source of truth for their entire supply chain process.
Next, the TMS system was configured to automate the shipment creation process. The dispatchers no longer had to manually create shipment orders as the TMS system would automatically generate shipping orders for each new order received. The system would also allocate the most optimal truck for each shipment, using artificial intelligence to take into account truck capacity, location, and availability, thereby optimizing the dispatch process.
The TMS system also enabled our client to manage their carriers more efficiently. The system allowed carriers to access the TMS portal and driver mobile apps, where they could view and accept shipment orders, schedule pickups, and deliveries, and provide real-time updates on shipment status. The system could also track the carriers’ performance, allowing the company to make data-driven decisions on which carriers to work with in the future.
Another significant advantage of the TMS system was the ability to optimize transportation routes. The system used sophisticated algorithms to calculate the most efficient routes for each truck, taking into account factors such as traffic conditions, weather conditions, and road closures. This led to a reduction in transportation costs and fuel consumption.
The TMS system also provided real-time visibility into the entire supply chain process. The system allowed the dispatchers to track the location and status of each shipment in real time, enabling them to manage their logistics operations more effectively. The system also provided their customers with real-time updates on the status of their orders, leading to increased customer satisfaction.
The implementation of the TMS system was a significant success for our client. It led to a reduction in transportation costs, improved operational efficiency, and increased customer satisfaction. The company was able to optimize its dispatch process, manage its carriers more efficiently, and gain real-time visibility into its entire supply chain process. The TMS system provided the company with a competitive edge, making them more agile and responsive to the changing market conditions. In the long run, the implementation of the TMS system enabled the company to become more profitable, which is critical in today’s highly competitive business landscape. A little over three years after onboarding the TMS system, the average annual savings has been approximately 6.7% of freight spend, or $3.1MM.
Case Study #3 – Medical Supply Client –Moved from Decentralized to Centralized Transportation Network
Marex was hired by a distributor of medical supplies to hospitals, clinics, and pharmacies across the southern US. Our client’s transportation logistics were decentralized, with each facility (e.g., mini-distribution center) responsible for managing their transportation operations. Marex performed a discovery initiative that put light on the inefficiencies, increased costs, and longer delivery times. Following our recommendation, this client decided to transition to centralized management of their transportation logistics.
Before the transition, each distribution center managed its transportation operations independently. Our client had multiple transportation vendors, mostly brokers, each with their own set of carriers, rates, and processes, leading to a lack of standardization and visibility into their supply chain process. They also lacked a single source of truth for their transportation data, making it challenging to manage their transportation operations and optimize their dispatch process.
We first centralized the management of their transportation logistics. Working closely with their leadership team, we created a transportation operations center “control tower”, which was responsible for managing all transportation operations across all distribution centers. The transportation operations center was staffed with experienced transportation professionals with a niche TMS system to manage the company’s transportation operations.
Our next step in the transition was to standardize the company’s transportation processes. The transportation operations center worked with the company’s transportation vendors to establish a set of standardized processes, rates, and service-level agreements. This led to increased standardization, visibility, and control over the entire supply chain process.
The third step in the transition was to implement a transportation management system (TMS). The TMS system provided the transportation operations center with real-time visibility into the entire supply chain process. The system allowed the transportation operations center to optimize transportation routes, allocate trucks more efficiently, and manage their carriers more effectively.
The transition from decentralized to centralized management of transportation logistics had several benefits for the company. The first benefit was increased standardization. The company was now able to standardize its transportation processes, rates, and service-level agreements across all distribution centers. This led to increased visibility and control over their entire supply chain process.
The second benefit was increased efficiency. The transportation operations center was able to optimize transportation routes, allocate trucks more efficiently, and manage their vendors more effectively, introducing more carriers than brokers.
The third benefit was increased customer satisfaction. The control tower auto-pushed real-time updates on the status of their orders, leading to increased customer satisfaction. Our client was able to provide faster delivery times and more reliable service resulting in more purchases from their customers.
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