Electrical Lighting Manufacturer Optimizes Supply Chain
The following case study does not include
company names or locations to protect the anonymity of our clients. For further
information, please contact KOM International.
Client / Industry
A
multinational manufacturer of lighting products.
Scope of KOM International's Mandate
The
client operated a distribution network of 7 manufacturing plants and 5 full-line
distribution centers and with smaller regional storage warehouses across North
America. KOM International was mandated to perform a strategic supply chain
study of the client's distribution network to optimize service levels and
the logistics costs.
Critical Issues
- 7
manufacturing plants
-
5 full-line distribution centers
-
High distribution costs
-
High inventory assets / low turns
-
Low service level
-
Low customer satisfaction level (fill rate, lead-time, damage and errors)
-
60% back orders
Objectives
- To
increase customer service level to 95%
-
Reduce total supply chain costs by 1.5%
-
Increase total quality of customer service
- Reduce
order handling costs
- Reduce
product damage from the current 2.6% by at least 20%
-
Significantly reduce back orders
KOM International's Recommendations
- 5
regional distribution centers stocking fast-moving products
-
Centralized national distribution center stocking slow-moving products
-
Market-driven pull system
-
Combination of cross docking of slow movers through regional distribution
centers and direct shipments from manufacturing plant to customer
-
Service level objectives stratified by A/B/C customers prioritization
Benefits
- Significant
reductions in distribution expenses
-
Significant reduction in inventory assets
- Back
orders were reduced as a result of major improvements in order fill rates
-
Customer service levels exceed 95%
-
Order turnaround time (i.e. lead time) dropped from 15 days to 2 days for
fast movers representing 80% of sales revenue.
