Deoleo

A Supply Chain Planning Case Study

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Highlights
  • Global supply chain across more than 90 countries
  • Added forecasting, inventory and replenishment planning to SAP APO
  • Product availability increased to 99% with substantial inventory improvement

Project and Objectives

Deoleo operates a truly global supply chain across more than 90 countries in Europe, North and South America, Africa and Asia. Twenty factories located in 9 countries, and intermediate centers with numerous restocking systems, supply more than 50 distribution centers. The company markets 4000 finished products, requiring more than 10,000 constituent parts.

The Deoleo supply chain management team set out with a global vision to operationalize two fundamental goals across their supply chain: to offer their clients the highest possible service level, while achieving optimum inventory management. The IPSC (Planning of the Supply Chain) project was initiated to bring all the brands into line for these objectives and to completely integrate acquired companies’ IT systems.

The team also wanted to reduce transportation costs through fewer partial deliveries, less product repositioning, and less premium freight. In addition, they hoped to reduce product shelf life obsolescence. A final goal was to simplify systems and reduce administration.

Day-to-Day

Sales forecasts were jointly formulated in SAP APO by the trading areas and the planning department, and approved by both departments.

Originally the plan was to use this forecast to obtain the best possible service level and plan production, while minimizing inventory. However, it became soon clear that additional technology would be required to achieve these objectives. The team selected ToolsGroup’s SO99+ for demand planning and inventory management. SO99+ calculates the forecast, service and stock levels and the replenishment plan for both distributed and manufactured product.

The system was implemented in Spain in 2008 and was then rolled out globally. The solution now supports an integrated global distribution network in which each distribution center is supplied by manufacturing facilities throughout the world.

Results & Benefits

The implementation of SO99+ has allowed Deoleo to meet their proposed objectives. Product availability has increased from 97% to 99% and delivery service quality has improved from less than 91% to nearly 96%. Delivery service quality has particularly improved for short turnaround time products, where retail clients require service levels of nearly 100%.

Meanwhile inventories have been reduced beyond plan. Rice products have gone from 15.9 days of inventory to 9.2 days. Oil products have gone from 23 days of inventory to 17.4 days. Additional detailed results are as follows:

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Deoleo is a global food company headquartered in Spain with annual sales in excess of $20 Billion. It has dominant market positions in many product categories including cooking oils (its Carbonell is the top-selling brand in the world), rice, olives, and vinegar.

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