Manufacturers Repsol and Castrol are just two on a growing list of ToolsGroup's customers using its DPM solution to increase service levels and decrease inventory throughout the supply chain. Several other large oil and lubricant companies in North America and Europe, representing more than $400 billion in sales and more than 57,000 retail sites, are also now employing ToolsGroup software to strategically position inventory in their multi-echelon supply chains.
At Castrol, ToolsGroup's DPM solution has been so successful that the company has rolled it out worldwide across all of its business units. Repsol has also added more divisions after its initial success, now covering the Lubricants, Paraffins, By-Products and Sulphates, and Asphalts divisions.
Castrol Targets Uncertainty in the Supply Chain
Castrol was one of the first companies in its industry to employ ToolsGroup's stochastic modelling technology to manage the uncertainty in the supply chain. Many companies try to reduce supply chain uncertainty by improving forecast accuracy. Castrol realized that in order to deliver very high service levels with optimal inventory levels it also needed to properly manage the natural uncertainty in the supply chain.
The company built a system that employs stochastic modeling techniques to accurately measure demand and supply chain volatility, and accurately set inventory targets required to accommodate the volatility. The resulting system has allowed Castrol to deliver extremely high customer service levels, despite a complex multi-echelon distribution network.
The Castrol project team reduced total network inventories by 35 percent, 20 percent in the first year after implementation and then 20 percent again in the following year. Despite the lower inventories, service levels to customers - defined by line-fill rates - are up by 9 percent overall.
Repsol Improves Service Levels and Lowers Inventory
A $42 billion company, Repsol is the leading manufacturer and distributor of lubricants, asphalts and by-products headquartered in Spain. The company recognized that to remain the leader in an extremely competitive and congested industry, it had to improve order line-fill rates and to decrease inventories.
In the first phase of its project with ToolsGroup, for the Lubricants and Paraffins divisions, Repsol was able to improve service levels from below 90 percent to 97 percent, while simultaneously reducing stock by 16 percent.
In addition, DPM enabled the company to maintain an optimal global service policy, and provided the ability to model alternatives with a reliable estimate of the cost required to fulfill any specified global service objective.
Other goals for the project were a fast and seamless integration with the company's SAP enterprise resource planning (ERP) system, efficient replenishment of its nine secondary warehouses from the central warehouse, and precise input for manufacturing planning.
ToolsGroup provides inventory optimization software solutions for distribution-intensive businesses. Its powerful stochastic solution optimizes distribution chain inventory, from finished goods assembly to the end consumer, and from strategic network design to daily operations. It allows supply chain managers to meet demanding service levels, while reducing inventory and operating costs. With more than 80 customers in 28 countries, it is the most experienced inventory optimization software provider worldwide. For more information on ToolsGroup and its solutions, please visit www.ToolsGroup.com.