Provider of paper-based packaging
Our customer is a globally operating company and one of the leading providers of paper-based packaging with 350 production sites, being present in 21 countries in Europe and 12 countries in the Americas.
The customer had a high total cost of warehousing, mainly due to the use of expensive external warehousing. Seasonality created an unbalanced situation between demand and supply; swings were absorbed by renting external warehousing. They organized the warehouse capacities locally and often short term. There was a lack of coordination in demand and supply, and warehouse requirements. The customer also had a high level of ‘hidden’ costs by transferring material back and forward between internal and external warehouses.
Together with the customer we collected all data (e.g. costs, value stream map) regarding warehouses, and transport modes. We developed a European paper warehouse model whereby:
- total cost are optimized
- alternative transport modes (e.g. rail / water) are taking into consideration
This allows the customer to run different footprint scenarios to optimize the current situation and simulate potential future footprints with new or consolidated warehouses.
The project resulted in a complete database with warehouses tariff and capability information, and inventory and warehouse capacity projects to support S&OP planning. The customer now has an optimized network of warehouses which provides the lowest total cost and which warehouses should or shouldn’t be used in the future in times of overflows of stock. With the won insights they can negotiate on better warehouse tariffs due to consolidation of contracts. EyeOn also provided business case information to build their own warehouse to reduce warehousing cost on the long term.