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.
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.
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