Supply Chain Management Case Study:

Case Study - Problem Description

Business Logistics was contracted by a mid-size candy manufacturer with national and international distribution to find ways to streamline its supply chain management, to improve internal and external communications and customer service quality, and to reduce logistics costs. A core problem experienced by our client was that it was constantly operating in a "hurry-up" mode with little time to plan and to execute its business smoothly. Our initial hypothesis was that process changes, not expensive software, would initially be required in order to vastly improve this company's overall supply chain management.

Case Study - Testing the Hypothesis

To test our hypothesis, and to identify and develop solutions for this client we arranged to:

1.) Conduct a supply chain evaluation: In this stage, we conducted interviews with department managers including marketing, sales, production planning, purchasing, manufacturing, accounting, and transportation to develop an overall picture of the company's supply chain operations. These interviews were followed by our preparing flow charts that enabled us to track the flows and timing of materials and information from the moment orders were placed throughout the chain to the moment that customer deliveries were made. All facets of the operation were considered, including sales promotions, order booking, credit approval, sales forecasting, materials and ingredients purchasing, inventory management, order fulfillment, customer service, and freight shipping management to the customer.

2.) Develop a Task Force of involved employees: We worked with our client to appoint an insider manager to work with us to bring together employees within the company having involvement in the various aspects of the supply chain management. This group of people formed a special Task Force, charged with the responsibility of identifying ways to improve the flows of materials and information throughout the supply chain, including flows both to and from the company involving outside vendors. Weekly meetings were held to address various issues and to find ways to resolve them to increase the inter-departmental synchronization of various supply chain management activities.

Case Study - Our Findings

Our work with the Task Force team uncovered many "bottlenecks" and communications failures in the supply chain that, once changed, resulted in sweeping improvements throughout the company. For instance, we found that:

1.) Sales brokers were holding orders until the last minute before sending them to our client in case there were any changes to be made. This practice left very little time for our client to make production adjustments to cover any possible inventory shortages.

2.) Credit checks were frequently delaying the release of orders to the production-planning department. We found that the vast majority of orders were approved by credit, and that by informing the rest of the company that these orders were in "cue", preparations could be made to accommodate orders much faster once the accounting department released them.

3.) The transportation department had been experiencing difficulty getting trucks to handle customer deliveries. We found that truckers were given less than 24 hours notice before orders were to be shipped, not allowing them enough time to position the necessary equipment at the customer's shipping location. The short lead time was mostly due to the fact that the transportation department was not informed of pending orders until the day before they were to be shipped.

Case Study - Results Achieved: Better Service and Cost Savings

By coordinating upstream communications we were able to increase the transportation department's advance notice of orders by as much as 10 days. In addition, we worked with the department to prepare an advance Transportation Needs Plan that was shared with our client's preferred carriers well in advance of the actual service need dates. This change in the supply chain management enabled carriers to plan for our client's transportation needs, significantly improving our client's customer service levels.

We were also able to negotiate reduced freight rates as a direct result of developing the Transportation Needs Plan. Instead of telling carriers when to pick orders up, we reversed roles and asked carriers to tell our client when loads should be picked up so that they would be delivered on the date and time as requested by each customer. This enabled the carriers to increase their productivity through the better and more efficient use of equipment.

These improvements are but a few examples of how our client benefited from our Supply Chain Management Consulting Services. One added benefit, for example, was that employee morale improved as a result of the increased levels of inter-department communication and cooperation. The company is now performing well financially and is very competitive.