The Company
- World’s Second Largest Beer Company
The Challenge
- Reduce Stock-outs, Supply Chain Losses and Inventory & Improve Service Level to Customer
Methodology
OCI carried out an extensive interview process with management. The issues were complex and many different factors contributing to them, and many different perspectives to consider while resolving them. The OCI team hypothesized a hub-and-spoke approach to distribution could achieve these goals with following objectives:
- Pooling inventory in one location would meet demand on an as-needed basis – 20% reduction in lead times
- By aggregating supplies, the model would reduce variability in supply and demand – 5% increase in fill rates
- Larger quantities of supplies in hub would allow spokes to store less stock, reducing overall inventory levels by 15%
- Economies of scale and therefore procurement leverage would reduce overall warehousing costs by $200,000
- Strategically sourcing the warehouse in a jurisdiction allowing heavier roadways payloads would deliver same volume with less containers enabling transportation savings of $300,000
- E-tools, Track N Trace™, would enable end-to-end visibility on brewery, customs, ocean freight, inventory and stock-outs
Results
- A savings of just under $1 million and an increase in customer service level by 3%.
- Overall inventory reduced by $1 million
