Year

2019

Type of Project

Inventaire

Savings

3M$

Directed by

Martin Nadon

Overview

Customer Presentation

Our client is the Canadian leader in the auto glass replacement, repair and distribution sector.

Mandate

C2.0 has been mandated for a project to optimize the supply chain, more specifically in terms of demand management, purchasing and the distribution network of these warehouses.

Client's goal

Increase system usage and revalidate parameters for demand management. Ensure employee training to ensure a continued understanding of the system.

Execution of the project

C2.0 was mandated for a 16-week term. As part of the mandate, the approach proposed and adopted by the client consisted of 5 steps:

According to Pareto’s classification, we established distinct categories in order to establish adequate inventories according to the type of products and to ensure that we maintained an optimal inventory for the client’s demands.

We have adjusted the level of service in order to answer correctly to the inventory classification. Thus, we have increased the level of service for inventories classified A and B and it has been revised downward for inventories classified C or lower.

We have standardized the replenishment cycle to define the optimal reorder point calculation. This has resulted in higher inventory turns for high-volume products and also minimized orders by purchasing 3 to 6 months of inventory for low-volume items, thereby reducing product handling and reducing breakage losses.

The client had two delivery times, one contractual and one calculated. Therefore, we recommended the use of a single delivery time for suppliers, which allowed to reduce the minimum inventory level for all items. It also allowed to manage a more accurate material receipt date because suppliers deliver on time, so the additional calculated lead time that was in the system had no added value.

To optimize inventory, we set the min/max parameters based on a weekly order lead time, a safety stock that takes into account the distance between the warehouse and the distribution center, and a replenishment cycle based on the size of the warehouse.

Results

The optimization of operations that C2.0 carried out at the client’s site resulted in overall savings of just over $3,000,000.

We also observed, during our mandate, that the client had $1.7M in obsolete inventory, in addition to $8.3M in “excessive” inventory for a total of $10M on a $20M inventory. Thus, we suggested to the client to reduce its inventories in order to limit its costs related to its excess inventory.

YEAR​

2019

Type of project

Transport

Savings

600K$

directed by

Afef bouguerra
Martin Nadon

Overview

Customer Presentation

Our client is one of the largest poultry cooperatives in Quebec. It is known for its local production and quality products.

Challenge

Considering the upcoming opening of a new distribution center and the centralization of its shipments, the client wanted to launch a transportation call for tenders, to optimize its network and analyze the impact of this change.

Client's goal

Through this call for tenders, the client’s objective was to reduce its costs and cover the volume shipped.

Execution of the project

Conseil 2.0 based its analysis on a year of historical data considering the upcoming changes (new distribution center) and the customer’s intent to centralize its distribution.

The historical data allowed us to define a baseline of $6 million CAD (historical cost). It permitted a comparative evaluation at the end of the project to determine the savings generated.

With that data, we also modelled the distribution network defining 164 lanes (origin-destination) and included different modes of transportation: Truckload (TL) and Less Than Truckload (LTL).

To answer this event, more than 140 carriers were invited to participate.

To consider the new distribution center, Conseil 2.0 created lanes to model the customer’s new reality.

The methodology proposed and adopted by the client was in 5 steps:

The objective of this phase was to evaluate the carriers invited to the event. A qualitative questionnaire was sent to them to find out if they met the criteria and requirements of the client. Only qualified carriers had access to the following steps.

All the qualified carriers in the RFI step were requested to provide rates for the lanes they were interested in. Conseil 2.0 ensured the validity of the bids received during round 1 and supported the communication with all the carriers throughout the event.

The objective of this step was to provide feedback to the carriers that participated in round 1. Conseil 2.0 informed them of their position compared to other participants and assisted them to correct potential errors in the bids. The feedback given to the carriers allowed us to maximize the savings that we were able to obtain from the market.

In collaboration with the client, Conseil 2.0 defined different scenarios of analysis and simulations to find the best solution that would meet the client’s needs and requirements.

Examples of scenarios realized:

  • Cost based allocation: Allocate volume to the most competitive bids (Low cost, no constraints)
  • Cost based allocation and capacity constraints: Allocate volume to the most competitive bids, while respecting the carrier’s capacity per lane and overall capacity.
  • Allocation that favors existing carriers: Favor carriers that are currently active in the customer’s distribution network.
  • Introduction of X% new carriers: Evaluate the impact of introducing a certain percentage of new carriers into the distribution network.
  • Exclusion of brokers: Measure the impact of allocating 100% of the volume to asset base carriers only.
  • Limiting the number of carriers to be used: Finding the optimal balance between the number of carriers to be managed and the coverage of total volume.
  • Ability to allocate primary, secondary, and tertiary carriers.
  • Comparison between the current and future network: Conseil 2.0 presented to the client an impact analysis, allowing them to have an overview of the expected savings following the implementation of the new distribution center.

Considering the client’s constraints and operational and strategic reality, Conseil 2.0 was able to analyze and compare more than 2000 Bids to provide optimal allocations that resulted from the optimization phase.

Results

The transportation tender that Conseil 2.0 managed, generated important savings for the client. Indeed, the baseline was reduced by 10%, resulting in a saving of $600,000. In addition, in response to Conseil 2.0’s achievements, the number of carriers our client had to deal with decreased by 65%. Thanks to this significant decrease, the client realized important transportation savings and was still able to provide equally effective coverage.

Year

2019

Type of project

Transport

savings

85M$

Directed by

Afef Bouguerra
Martin Nadon

Overview

Customer Presentation

Our client is a leading multinational retailer specializing in mass distribution. He is ranked in the Fortune 100, a ranking of the top 100 U.S. companies by revenue size.

Challenge

In a context of shortage of carrier availability, the customer was looking to ensure capacity for its network. Thus, he wanted to reduce his transportation costs, which were too high, and minimize the carrier database (the number of carriers to manage).

Client's goal

The client wanted to carry out a transportation tender in order to optimize their distribution network for their store in Canada and Mexico.

Execution of the project

Based on one year of historical data, Conseil 2.0 modeled the distribution network by defining 14,000 lanes (origin-destination) for Canada and 1,800 lanes for Mexico. The historical data also defined a baseline (historical cost) of $450M for the Canadian distribution network and $285M CDN in Mexico. The historical data was used to perform a comparative evaluation at the end of the project to determine the savings generated.

Both projects included different modes of transportation: TL, Intermodal and LTL. More than 1200 carriers were and were invited to participate in these events.

The 6-step methodology was proposed and adopted by the client:

The objective of this phase was to evaluate the carriers invited to the event. A qualitative questionnaire was sent to the carriers to find out if they met the criteria and requirements of the client. Only qualified carriers had access to the following steps.

All qualified carriers in the RFI step were asked to provide rates for the lanes they were interested in. During round 1, Conseil 2.0 ensured the validity of the bids received and supported communication with all carriers throughout the event.

The objective of this step was to provide feedback to the carriers that participated in round 1, informing them of their position relative to other participants and also to correct the bids if there were any errors on their part. The feedback given to the carriers allowed us to maximize the savings that we were able to obtain from the market.

In collaboration with the client, Conseil 2.0 defined different scenarios of analysis and simulations to find the best solution that would meet the client’s needs and requirements.

Examples of scenarios realized

  • Cost based allocation: Allocate volume to the most competitive bids (Low cost, no constraints)
  • Cost based allocation and capacity constraints: Allocate volume to the most competitive bids while respecting the carrier’s capacity per lane and overall capacity.
  • Allocation that encourages existing carriers: Encourage carriers that are currently active in the customer’s distribution network.
  • Introduction of X% new carriers: Evaluate the impact of introducing new carriers into the distribution network.
  • Exclusion of brokers: Measure the impact of allocating 100% of the volume to asset base carriers only.
  • Allocation by maximizing the use of the customer’s fleet
  • Limiting the number of carriers to be used: Finding the optimal balance between the number of carriers to be managed and the coverage of total volume.
  • Maximizing a transportation mode: Assess the impact of maximizing the use of a particular transportation mode (rail, road, power only, etc.).
  • Ability to allocate primary, secondary, and tertiary carriers

Once the analysis done, C2.0 identified the high-volume lanes that had a lot of bidding, therefore a great competitiveness, as potential lanes to go into e-auction and to obtain more savings. 150M of transportation volume was auctioned and 94 carriers participated. During this stage 5% additional savings were achieved.

By taking into account the constraints and the operational and strategic reality of the client, Conseil 2.0 was able to provide optimal allocations that were the result of the optimization and e-auction step of this auction process. During this process more than 500,000 bids were analyzed and optimized to provide the optimal result to the client.

Results

The transportation tender managed by C2.0 resulted in significant savings. Indeed, a reduction of approximately 15% was achieved for both tenders. In addition, the number of carriers was reduced by 150, going from 258 to 108 carriers, yet allowing just as effective coverage.