Leading Consumer Healthcare Company Improves Inventory Accuracy, Service Levels and Cuts Supply Costs by 85%
Challenge
One of OHL’s key customers is a leading global consumer healthcare company. With an expertise in infant and children's nutrition, the company serves more than 70 products in over 50 countries in Americas, Europe, and Asia-Pacific, and operates major manufacturing facilities in every region where it conducts business. Prior to working with OHL, the company faced a number of business challenges. Their products were not being delivered to their customers in a timely fashion. They encountered extensive customer service issues as a result of being underserved by their medical distributor. In addition, the company suffered from increasing operational inefficiencies due to maintaining more than 50 locations in their distribution network, and had no visibility to inventory levels or supply chain.
Approach
OHL adopted a multifaceted approach to solve this customer's problems. Based on a network optimization study conducted, a flexible campus network model was built and customized for the customer's specific needs. Company’s transportation operations were transformed from multiple distributors to a single small parcel vendor. OHL leveraged the most effective warehouse technologies and introduced software solutions such as Synapse, Synapse Online and WebSynapse. In addition, a program change from Over Pack to Banding was effectively implemented to reduce supply costs.
Value
By remodeling its customer’s distribution network, OHL reduced the number of locations from 52 to 8 warehouses with a single point of contact. The consolidated number of distribution locations not only decreased the inventory, fuel, and operating costs, but also promoted enhanced delivery times and increased service levels. Introduction of a single small parcel vendor reduced the complexity of the company’s transportation operations, decreased service issues, and enhanced transit times. OHL’s portfolio of software solutions enabled its customer with real-time information providing full visibility to track its inventory at each location and operations throughout its supply chain.
Return on Investment
As of August 2009, OHL enabled the company to achieve service levels of 99.97% in inventory accuracy, 99.81% in on-time shipping, and less than 0.05% of customer service issues. The company’s supply costs were cut by 85% within 6 months.