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When Brammer PLC, a leading pan-European added value distributor, with a workforce of almost 2000 throughout Europe, identified the need to radically redesign their inventory management system, and deployment topology, they turned to Lanner’s WITNESS simulation solution to assist them. They are targeting reductions in their inventory of between 10 and 20%, with improved service capability, representing significant cost savings to the business.

Background

Brammer PLC are market leaders in the supply of industrial spare parts, and related services to the MRO market across all areas of manufacturing and have a comprehensive catalogue of products, which comprises around 2 million different SKU’s in 10 different European countries at 220 locations. This vast range, combined with the random nature of demand, made planning very difficult for Brammer PLC.

In addition, as the business grew through with the acquisition of local operations in countries that include France, Germany and Spain, the need to integrate and standardise supply chain processes to flourish in a highly competitive marketplace where maximised efficiency is paramount, was essential.

Total Supply Chain Integration

Brammer PLC is structured around regional and national distribution centres, with European distribution centres being pilot tested for certain products.

Their approach to total supply chain integration was to first understand the business and logistical requirements of each country’s distribution network at both branch and national level and to accommodate these country-specific needs into a standard European business process for demand forecasting, stock optimisation and deployment.

To achieve this, they needed a detailed understanding of stock levels and service expectations at each point in the supply chain. Additionally they needed to identify stock provisioning methodologies, taking into account issues such as re-order quantities; and to understand the detailed statistical characteristics of local and national demand.

As a first stage in the process, Brammer PLC developed an application within SPSS, a statistical package to analyse historical sales data, to forecast the likelihood of sale of every individual product. The outcome of this was a suggested stockholding policy and “stock score” for each one of the modelled products. This provided a starting point for detailed stock planning but did not provide either a simulation of likely stock value and service level outcomes from the adopted stock policies, or the ‘risk-free’ environment Brammer PLC needed in which to test out multiple, complicated, future scenarios prior to rollout.

Accordingly, Brammer PLC sought a sophisticated tool to allow modelling and simulation of potential outcomes, and chose WITNESS for this purpose.

Discrete Event Simulation

“Initially we attempted to test our hypothesis without using discrete event simulation, but we found that it was not possible to test different scenarios and their associated results without it, due to the sheer complexity of Brammer PLC’s supply chain, the volume of products and the fluctuations in demand. We were also looking for a high level of accuracy and reliability of result before implementing any rollout based upon our findings. Having considered a number of possible solutions in this area we decided that WITNESS had a user friendly, flexible graphical interface, was easy to use and could cope with the complexities of our requirements” said Yongli Ge, Logistics Business Analyst at Brammer PLC.

Brammer PLC commenced the pilot testing of the proposed solution by first modelling a subset of the operation in France, and then went on to model the distribution centres for slightly smaller operations in Spain and a subset of the business in the UK. In each case, theoretical models were built and reviewed, before being implemented under controlled test conditions, to demonstrate that the theory could be converted into practice. The findings and lessons learned from this exercise have been fed back into the models, which have themselves been substantially improved through reiteration and refinement. This experience has formed the basis for a standard best practice stock forecasting and planning policy, which will ultimately be rolled out throughout Europe.

In order for the model to draw from correct and relevant data, Brammer PLC referred to historical sales data and past purchase orders together with internal movements, all of which were located within Microsoft Access databases.

Delivering joined-up results

With more than 2 million SKU’s throughout Europe, the initial pilots in France, Spain and the UK, were restricted to manageable product sets. Nevertheless, each project incorporated in excess of 30,000 products, and the rollout taking place now has already extended this into the hundreds of thousands. “We modelled the business rules of each country separately, giving us a unique concise view of the local requirements and issues” said Yongli.

Although the management of the development of the project has been centralised within Brammer PLC, the rollout across Europe will require local stock managers to have autonomy in the use of the best practice system being developed. Using WITNESS, Brammer PLC are able to deliver an intuitive, user-friendly interface with a run-time model for each country to enable local stock managers to model and change their own stock profiles, within the context of Brammer PLC’s best practice WITNESS-driven model.

A separate project to establish a uniform product database across all locations will, when completed, allow linkages to be made between products and geographies thereby enabling Brammer PLC to deliver a consolidated European Distribution Centre model, providing the company with a pan-European view. Through this, the ability to achieve greater efficiencies and improvements in service performance will be realised.

Results

The intuitive and easy-to-use graphical interface of WITNESS enabled Brammer PLC to tackle this multi-product, pan-European project themselves whilst at the same time, providing the capacity needed to record and simulate multiple scenarios based on a huge inventory.

The empirical results of the national pilot projects have validated the model predictions for each country, to within a few percentage points. The results from the simulation within WITNESS have proven to be remarkably accurate in practice. Brammer PLC have now successfully piloted the stock deployment model and are now rolling out the application across the whole of their country businesses in France, Spain, Germany and the UK.


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