How we helped our client to save over Rs.48 lakhs annually!
Problem Statement
One of our esteemed clients, a prominent manufacturer of women’s sanitary pads in India, faced a formidable challenge in its supply chain operations. With an extensive network of distributors spread across the country, they operated distribution centres (DCs) in 17 key cities. However, they struggled to optimize their supply chain processes effectively, hindering their ability to reduce costs while maintaining a 3-day turnaround time for at least 95% of their orders. Seeking a solution to this complex dilemma, they approached us as their trusted consultancy and advisory partner.
The primary objective was to streamline their supply chain operations and unlock cost-saving opportunities while ensuring the prompt delivery of orders. The existing distribution network posed significant challenges in cost management, inventory control, and maintaining delivery timelines. Our task was to evaluate their supply chain thoroughly, identify areas for improvement, and devise a comprehensive strategy to enable them to overcome these obstacles and achieve their business objectives.
Our Approach: Deep Dive and Comprehensive Analysis
We adopted a thorough and meticulous approach to tackle the client’s supply chain complexity head-on. The initial phase involved spending two days engaging with the client’s top leadership and ground team to gain comprehensive insights into their operations. We also conducted a firsthand visit to their manufacturing plant located in the National Capital Region (NCR). This immersive experience provided us with valuable firsthand knowledge of their processes, challenges, and opportunities for improvement.
Equipped with a holistic understanding of the client’s business, we requested curated data on their outbound movement from each distribution centre. This data included critical parameters such as price points, SKU-level pack sizes, and shipping costs. Additionally, we conducted a detailed analysis of the point-to-point shipping distances and transportation rates from each DC to the respective delivery cities.
To identify the most cost-effective and efficient solution, we utilized the power of multi-Integer Linear Programming (MILP) optimization methods. Utilizing advanced solver tools within the Excel platform, we performed numerous iterations to evaluate various scenarios while strictly adhering to the crucial 3-day turnaround time constraint. We aimed to identify the optimal number of DCs to minimize costs without compromising the desired delivery timelines.
The Outcome: Achieving Remarkable Cost Savings and Operational Efficiency
Our proposed solution proved to be a transformative success for the client’s supply chain operations. By strategically reducing the number of DCs from 17 to just 7, we unlocked significant cost savings of over Rs.48 lakhs annually in inbound transportation and inventory-keeping costs. Most notably, these cost reductions were attained while maintaining the critical 3-day order turnaround time, ensuring prompt deliveries and customer satisfaction.
Moreover, our optimization efforts resulted in a substantial 50% reduction in the projected inventory levels. The company’s inventory decreased from 18 lakh units to a lean 9.8 lakh units. This reduction contributed to cost savings and streamlined operations, enhancing overall efficiency.
The streamlined supply chain and improved operational efficiency enabled the client to meet customer demands promptly and effectively. The optimized processes fostered cost reductions, bolstered customer satisfaction, and strengthened distributor relationships.
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AAJ Supply Chain Management
