$16M
Annual supply chain savings
18
DCs
1,200
Customer locations
30,000
Products
Schneider Electric grew fast through acquisitions in Asia-Pacific, and the region’s supply chain cost structure significantly exceeded known benchmarks and metrics.
So Schneider Electric partnered with Solvoyo to optimize its Asia-Pacific supply chain network. After a network study it adopted a radically different supply chain strategy, reduced the number of DCs, and saves $16M a year in supply chain costs.
A Fast-Growing Asia-Pacific Region with Disconnected Practices and Above-Benchmark Costs
Schneider Electric wanted to strengthen its Asia-Pacific market position by reducing the operating cost of its supply chain network. It also wanted to optimize the overall level of standing inventory and deliver the levels of service it had promised its customers.
The region’s supply chain had three problems:
- Process and practice disconnects due to the unique supply chain infrastructure
- A high number of stock locations, overlapping logistics services and unhappy customer segments, following growth in six independent business units in the same region
- A cost structure that significantly exceeded known benchmarks and metrics
Supply Chain Network Optimization Built on Total Cost to Serve Modeling
Schneider Electric ran Network Design and Supply Chain Re-engineering projects in Asia-Pacific. They combined Dr. John Gattorna’s Dynamic Alignment concept, which means understanding customer buying behavior and aligning it with the ambitions of the growing business, with Solvoyo’s modeling technology, which enabled Total Cost to Serve scenario-based optimization.
After a network study, Schneider Electric adopted a radically different supply chain strategy. It reduced the operating cost of the network by decreasing the number of DCs and optimized the overall level of standing inventory.
The company also streamlined its supply chain infrastructure to ready it for future growth and acquisition, and delivered the promised levels of service to its customers.
$16M in Annual Supply Chain Savings
The project saves Schneider Electric $16M a year in supply chain costs across Asia-Pacific. The other gains:
- Lower operating cost of the supply chain network, through fewer DCs
- Optimized standing inventory overall
- Promised service levels delivered to customers
- A streamlined supply chain infrastructure, ready for future growth and acquisition
What Does This Mean for You?
In Asia-Pacific, growth in six independent business units in the same region left Schneider Electric with a high number of stock locations and overlapping logistics services. It used Total Cost to Serve scenario-based optimization, reduced the number of DCs, and saves $16M a year in supply chain costs.
If you have grown through acquisitions and your regional cost structure sits above benchmarks, Schneider Electric faced the same position. Solvoyo’s modeling technology supported its Network Design and Supply Chain Re-engineering projects in Asia-Pacific, and the company also optimized its standing inventory.
About Company
Schneider Electric is a global energy manufacturer. Its Asia-Pacific supply chain network has 350 vendor source locations, 18 DCs, 1,200 customer locations and 30,000 products, with 6M customer order transactions a year.
Achievements
$16M in annual supply chain savings
Fewer DCs and a lower network operating cost
Standing inventory optimized, promised service levels delivered
Infrastructure streamlined for future growth and acquisition
Don’t take our word for it
Our successful Network Design and Supply Chain Re-engineering projects in Asia-Pacific had two founding key ingredients. One was the science of Dr. John Gattorna, the Dynamic Alignment concept of truly understanding customer buying behaviour and aligning them with the ambitions of the growing business. The other was Solvoyo’s modeling technology that enabled Total Cost to Serve for scenario-based optimization. The perfect combination of using data to eradicate emotionally-based “sacred cows” and driving alignment for a customer-centric supply chain!
80% of IT tools investment fails if the partners don’t strive to continuously improve and adapt. That is what sets our partnership with Solvoyo apart.
With Solvoyo, we eliminated spreadsheets from the process and simultaneously increased process speed and planner efficiency across all regions.
By rationalizing our North American network, we provided improved service at lower costs through redesigning our network. Our project succeeded in shifting our “inventory-centric” perspective to one of “total-cost optimization.” We have since consolidated our depots in North America, leading to significant infrastructure cost savings as well as a sustained inventory reduction of $5 Million.
We see rapid changes in demand, and when the inventory is short, we adjust our production plans accordingly. The adjustment requires a lot of manual work, causing suboptimal plans and inefficiencies on the production site. With Solvoyo’s optimized plans, not only do we make easy and smart decisions but also respond to any rapid change at the speed of the market.
