Supply Chain Network Optimisation
Client: SnapFresh (Qantas subsidiary):
Commodity products manufacturer and distributor
Background
A sudden doubling of demand created service level performance issues and increased product 'cost to serve'. Our client sought help with reconfiguring their supply chain, improving planning processes and systems and integrating their supply chain partners to improve service levels and increase margins by reducing supply chain costs.
Challenge
- Disintegrated and often ineffective supply chain planning processes
- Data integrity issues and no forecast for specific SKUs
- Ambiguous supply chain role and responsibility definitions for key participants
Multiple network scenarios were analysed including inventory analysis, new warehouses and other transportation modes and contracting arrangements.
More effective supply chain planning and policies were required.
Approach
GRA performed a Baseline Cost Analysis on the current distribution network and a Supply Chain Strategic Review on the As-Is situation.
Multiple distribution network options were assessed to estimate savings and benefits, considering total supply chain costs, service level performance, distribution channel routings, stocking strategies, capacity and transformation costs.
Supply chain processes and responsibilities were reviewed:
- identification of 'gaps' in the current Demand and Replenishment planning processes, recommendation of new stocking and replenishment policies
- recommendation of 'owners' for elements of the supply chain
- Integration and control of the demand and supply planning process through an effective S&OP process
GRA established the framework for a Service Level Agreement (SLA) between the major supply chain participants.
Outcome
- Supply chain cost reductions up to $600k pa were identified representing 12% reduction in product cost
- Improvements to the supply chain planning process and systems to improve service levels and inventory balance
- Time to market compression of one day on some of the markets supply
Quote
"Qantas is moving towards 15% cost and efficiency savings on its supply chain distribution for one million meals a month produced at its value-adding in-flight Snap Fresh offshoot... Mark Trundle, general manager of Snap Fresh, told FMN that four to five per cent savings had already been achieved and another five per cent was "close"... Trundle said GRA assessed Snap Fresh’s stock holding procedures, its revenue information and handling/delivery costings. He said that following the GRA advice, the 15 per cent savings were achievable by early 2007." FMN Magazine
