ADI

A Supply Chain Planning Case Study

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Highlights
  • Needed optimized stock to service relationship
  • Stock and service optimization improved balance sheet and cut fixed assets
  • Significant inventory reduction coupled with high service levels

Project and Objectives

In 2006, ARC Distribución Ibérica (ADI), a subsidiary of ARC International, turned to ToolsGroup to optimize its stock-to-service relationship, with a solution based on SO99+. The goal was to reduce inventories, improve service levels and ensure future network capacity from an optimal base.

ADI’s main goal was to achieve service excellence, based on an optimal stock level that would generate significant benefits for the company’s P&L and balance sheet. ToolsGroup carried out a financial assessment of potential savings for the group, which yielded a project to oversee the optimization of its stock-to-service relationship.

Day-to-Day

The SO99+ solution was implemented in May 2006 as a pilot, which became a full implementation in mid-2007 as part of a project to restructure ADI’s logistics network. This restructuring included both physical facilities (new buildings and distribution equipment) and the IT systems used to manage the supply chain (e.g., latest generation WMS). The company centralized its inventories and optimized the fulfillment processes by eliminating redundant structures, which improved operating flexibility, lowered logistics costs, and ensured both service quality and proximity to clients.

The project included the installation of two SO99+ applications, one for logistics and a second for sales, with a user interface that linked both to the company’s SAP ERP system.

Results & Benefits

The project had an immediate effect. During the pilot period, from May 2006 to July 2007, inventory was already reduced by 21%. After full implementation, ADI achieved an additional 7 percent drop in inventory from the level at the end of the pilot, while maintaining excellent client service levels.

Inventories were reduced again in 2008 through a stock centralization and consolidation project by an additional 17% from the level reached at the end of 2007. SO99+ supported this process by recommending inventory polices and stocking targets.

The total reduction from start to finish was 38%, all achieved while ADI sustained high service levels throughout, including during the stock centralization, in which they increased productivity and cut logistics costs.

ADI is now employing SO99+ to target overall service levels of above 95%, while also creating individualized service level targets for specific “service categories”.

“As a leading international company, we at ADI are constantly striving to improve the service we offer our customer while keeping inventory under control. ToolsGroup provided us with the expertise we needed in stock and service optimization, allowing us to improve our balance sheet and results by cutting fixed assets.” - D. Fernando Bermúdez, ADI Strategy Director

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Arc International is a French manufacturer and distributor of household goods with 15,000 employees and annual revenues of $2 billion. It is the leading manufacturer of crystal and glassware in the world. Its subsidiary, ARC Iberian Distribution (ADI), serves the markets of Spain and Portugal and has revenues of $230 million and a total portfolio of 8000 items. It has two warehouses serving its markets in Spain and Portugal.

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