News: Optimiza makes Kwik-Fit's Supply Chain Fitter
"We now have a resilient and industry-leading supply chain that
enables us to continue growing in the UK and to manage our costs
better in the future" says Chris Bosworth, Kwik-Fit's Marketing and
Business Development Director.
Kwik-Fit's move to a 245,0002ft National Distribution Centre
(NDC) at Corby gave the UK's leading fast-fit supplier of tyres the
opportunity to take complete control of its stock, extend its
supplier base to a global level and to provide its 670-plus UK
outlets with a daily delivery service, six days a week.
Consolidating sourcing and distribution into a National
Distribution Centre that houses 300,000 tyres in 1,600 different
sizes and brands, provided the business with the opportunity to
enhance its inventory management system - a move that has resulted
in clearer visibility of demand trends, more control over the
supply pipeline and a greater promotion capability as well as
enabling Kwik-Fit to operate notably more effectively and
efficiently at a substantially reduced cost.
In the year leading up to the supply chain redesign, the company
identified opportunities to make its operation more effective,
particularly in the areas of controlling supply into its retail
centres and centralising product-sourcing from suppliers.
With a typical retail centre holding 900 tyres, replenished from
a range of about 1000 parts, Kwik-Fit's supply chain had been
characterised by short notice supply issues, high product cost as a
result of manufacturers holding inventory on the company's behalf,
poor availability stemming from high competition in an under
produced market, and little or no product supply priority.
On top of these challenges, future trends were proving virtually
impossible to forecast accurately and were also proving to be
highly dependent on promotions - leaving the company exposed to
'bull-whips' whereby a successful promotion results in stock-outs
followed by re-order deliveries coinciding with a tailing-off in
demand.
To help resolve these issues, Kwik-Fit brought in its specialist
supply chain software partner, Barloworld Optimus, whose advanced
application Optimiza is the inventory optimisation powerhouse for
dozens of the world's leading companies, including Ricoh,
AutoGlass, Continental and Alstom.
"Coinciding with direct ordering from tyre manufacturers as far
away as China, Kwik-Fit also recognised the need to enhance its
capability to develop more accurate sales forecasts to cover the
exposure to longer supply pipelines" commented Barloworld Optimus'
Business Manager Graham Orr.
"It all comes down to having a supply chain that optimises
inventory placement throughout the network whilst maintaining a
dynamic capability to respond efficiently as business conditions
change" he said.
Optimiza was integrated with its add-on stablemate forecasting
application, Optimiza Demand Planner, to create a total solution,
synchronising supply and demand.
Having the ability to manage promotional activities by channel
within a product family forecast affords Kwik-Fit the luxury of
being able to quickly and effectively plan for changes in market
conditions or company strategy. With the high economic volatility
experienced over the last year, these innovations have proved
invaluable in ensuring that the supply chain is agile enough to
respond and adjust without sacrificing service or overly
compensating with layers of inventory.
With retail centre capacity viewed a major constraint in the
solution, accurate inventory levels that dynamically adjust to
forecast changes and promotional activities are key to ensuring
high availability at the lowest possible inventory level. The new
system not only manages these dynamic levels, but also generates
orders for all 670-plus centres based on customised constraining
logic subject to each item's criticality every night within a
four-hour processing window.
"For us at Barloworld, achieving results is as important to us
as it is to the people that we work with" says Barloworld
Consultant Grant Crosse.
"Kwik-Fit have inspired us through their dedication to deliver
first-class customer service, and through the Barloworld systems we
hope to have inspired them to exceed what they thought was
possible" he said.
The Optimiza 'Balanced Scorecard' provides high-level data
allowing for all Kwik-Fit's retail centres and NDC to be
consolidated into an instantly-visual report containing key areas
of forecasting accuracy, supplier performance, stock health
analysis and quality of retail centre service.
Set to pre-agreed target levels, each block of the Scorecard
corresponds to a key area of the inventory management process that
allows for the entire supply chain to function as efficiently as
possible and to obtain the best possible use from the Barloworld
systems.
Within the business, the entire internal supply chain is now
able to respond quickly to changes in brand mixes, market demand,
new supercessions and projected manufacturing shortfalls. Routine
supply forecasts are generated for all major suppliers for
medium-term planning, and manufacturing slots are booked via
blanket orders, allowing call-off orders to be raised on short lead
times - resulting in the net effect of reducing costs, securing
supply and ensuring on-request deliveries as and when required.
"The systems now in operation within the NDC will improve our
stock availability, create considerable efficiencies and introduce
a reverse-logistics capability" says Kwik-Fit's Head of Supply
Chain, Neil Arnott.