An American salt company produces products for food, water conditioning, industrial, agricultural and road/highway use. With more than 20 manufacturing facilities throughout the U.S., Canada and the Caribbean, the industry leader collaborated with NTT DATA to shake up its network modeling approach and modernize supply chain strategy.
The company’s supply chain network existed as a patchwork of an excessive number of distribution centers, with a network of approximately 40 DCs in 2011. By late 2013, the manufacturer had successfully reduced this number to 26 – but there was opportunity for further rationalization. Realizing a project of this scope would require greater analytics savvy to raise decision-making confidence; the company partnered with NTT DATA to continue its journey.
- Optimizes distribution to customers
- Provides transparency to production and storage capacities
- Reduces capacity gaps
- Provides alternate supply chain configurations for highly seasonal products
The next steps for an iconic brand
The company produces two broad sets of products that rely upon customized distribution channels. The first, referred to as bulk product, serves the needs of industrial customers. The bulk network comprises extraction mines, solar salt plants and storage stockpiles located across North America.
A second set contains packaged products and moves through a network including mines, plants, co-packers and distribution centers (DCs). The average daily consumer of salt products most likely purchases from this packaged product category.
Putting the design into action
Together, the teams envisioned a three-phase, three-goal engagement throughout the network design project. The first phase involved building a baseline model to increase confidence in the model and partnership. The second phase required the design team to optimize the current network to deliver some immediate returns on the project. The third phase asked the team to create a blueprint for the optimized future-state of the supply chain network.
Establishing a baseline
Once the baseline network design was completed, NTT DATA’s team took the model further by creating an optimized baseline. This involved changing production quantities at plant sites, maintaining the product portfolio at each plant and optimizing distribution to customers. The optimized baseline called for closing two of the network’s smaller warehouses. These steps allowed optimization of customer assignments to both plants and warehouses. The model demonstrated realized savings that were in line with pre-established expectations and the optimized baseline was executed in 2014.
With the new network established, the company embraced a more proactive approach and asked NTT DATA to begin development of an optimized future network. The team identified five warehouses to close due to geographic irrelevance and pinpointed three new warehouse locations to better serve its client base. The future state network also called for closing three plants. The company implemented initial changes to its supply chain network in 2015. Through ongoing collaboration and evaluation, the company was on its way to realizing the long-term advantages of consistent supply chain network design.
Building relationships beyond the model
Beyond the supply chain network design project, the company received additional benefits from the partnership with NTT DATA. The model validated data at a transaction level, which provided transparency to production and storage capacities. NTT DATA’s team supported planning processes related to three plant closures, quantifying the effects of production and distribution adjustments for each incremental closure. The team also provided contingency plans for temporary plant closures (weather, strikes,) to support expected demand.
The team supported capital expenditure decision-making for a critical plant, which demonstrated that a minimal improvement in capacity and some redistribution of production would erase a capacity gap. NTT DATA also used the modeling framework to evaluate alternate supply chain configurations for highly seasonal products.
Realizing the value of continuous network analysis and its accompanying support, the company moved to NTT DATA’s managed analytics services (MAS) partnership model in 2017. The business model allowed NTT DATA’s practitioners and the company’s business experts to create a composite center of excellence (COE) with members from both organizations. This allowed the leadership team to make better decisions due to the faster turnaround time on network scenarios provided by the MAS team and consistent access to the modeling team. With the MAS team refreshing model inputs regularly, the network could remain consistent with current conditions affecting the supply chain.
Through consistent and continuous engagement with NTT DATA, the company realized significant savings while adjusting its network as needed.
About this case study
An American salt company partners with NTT DATA to derive maximum value from its supply chain network.