The Accenture team had a clear objective: Help the company dramatically reduce its global inventory levels while delivering excellent customer service, thereby enabling its continued growth. Based on Accenture’s deep experience with the global supplier’s operations and knowledge of the oil-field services industry, the Accenture team hypothesized that adopting a hub-and-spoke approach to distribution could achieve these goals effectively.
By aggregating supplies and serving a greater number of customers from one location, the model would reduce the impacts on the business of variability in supply and demand. In addition, the presence of large quantities of supplies in centralized hubs would allow spokes to store less stock, thereby ensuring fast customer service while reducing the company’s overall inventory levels.
The first step toward achieving these benefits was to develop a baseline of the company’s current supply chain operations, which would allow Accenture to model various scenarios and calculate their incremental value to the company. To build this baseline, the Accenture team met with the global supplier’s country managers and global supply chain operations staff, gathering 12 months of global, regional, and local data on product prices and costs, demand and supply, and transportation expenses.
Feeding the data collected into Llamasoft’s Supply Chain Guru, a sophisticated network optimization software tool, Accenture worked with the client to create a model of the company’s existing supply chain operations. This detailed baseline model would serve as the foundation for the scenario planning phase of the project, during which the Accenture team used Llamasoft to develop a wide range of possible scenarios for the company’s new distribution network and help the supplier choose the option that would generate the greatest value.
However, devising a new distribution model was only part of the solution to the company’s inventory and supply chain challenges. Accenture also suggested a host of organizational changes and capability improvements to drive substantial and ongoing results.