Inventory reduction by multi echelon optimization

Flavors and fragrances

Company profile

Our customer is the global market leader in flavors and fragrances developed for the food and beverage industry, household goods, grooming and personal care products, and perfumes with a sales volume of around CHF 6 billion with 30% market share. Their production technology is either chemical or based on extrusion from natural ingredients. The customer has a staged production process : ingredients (MTS) and compounding of finished products (mainly MTO) resulting in complex inter-company good flows and a high level of dependencies. The flavors and fragrances are custom-made and sold under confidentiality agreements.


The company is on a journey to improve their supply chain planning capabilities. As a part of this improvements an inventory assessment is executed. The company already runs a high-quality stock parameter setting in SAP. They asked EyeOn to further optimize inventory settings in their supply chain with >60 locations, 13 echelon levels (BoM and locations) with 200.000 products and about 200 million records.


  • Kick-off and data collection
  • Data validation & analysis
  • Validation and analysis of leadtime, supply uncertainty and demand analysis, batch sizes, FG – RM relation analysis, safety stock analysis
  • Base-case determination, identification low hanging fruit, modeling intermittent demand, classification of demand and replenishment policy per class
  • Determining network effects of lot sizing
  • Scenario optimization
  • Set policy and determine optimal settings
  • Optimize over echelons (e.g. local and central stocking)
  • Improvement roadmap


We determined considerable inventory savings.We created data-driven insights in inventory drivers (e.g. lead time analysis), directed quick wins and practical improvement projects. We applied state of the art multi echelon inventory models (MEIO) showing optimized parameters. The optimized parameters were implemented using a decision tree logic. We extensively trained the planners in their Center of Excellence in a multiple day workshop to understand MEIO and the forthcoming decision tree. Confirmed savings in the first year are over 20 M€.

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