Agricultural company optimizes its supply chain costs

Problem:

Tessenderlo Group’s North American operations faced increasing supply chain constraints due to steady market growth. Challenges included limited transportation asset availability, restricted transport mode accessibility, uneven production capacity utilization, and rising operating costs across multiple plants and distribution terminals.

Solution:

The company’s initial project focused on two core products produced at multiple plant locations. A baseline model analyzed capacity utilization, production costs, transportation spending, and terminal distribution costs. Multiple scenarios were simulated to optimize customer service by adjusting production and distribution, with the top 10 reviewed by stakeholders to select the best future state strategy.

Results:

• Identified approximately $1.4 million in annual savings through optimized production and distribution strategies.
• Gained actionable insights for redeploying production and distribution assets efficiently.
• Established a scalable approach to optimize costs for other products and network segments.

OVERVIEW:

For over 100 years Tessenderlo Group, a €1.6B diversified industrial organization has been delivering world-class products and solutions around agriculture and bio residuals. Presently the organization operates at more than 100 locations across the globe, including 15 production plants and over 100 distribution terminals.

CHALLENGE:

As one can imagine, as a market's population increases, so does the demand for agricultural products. In North America, Tessenderlo has enjoyed steady organic growth since its inception. However, growth does not come without its challenges. With constraints in their supply chain network becoming more evident, Tessenderlo recognized transportation asset availability, accessibility of transport modes, production capacity utilization and operating costs needed to improve. Presented with this daunting task, Tessenderlo quickly realized it was in their best interest to hone in on these challenges by creating a practice dedicated to Supply Chain Analytics.

SOLUTION:

In order to rapidly get their Supply Chain Analytics capabilities off the ground, the Tessenderlo North American team selected anyLogistix as their primary Supply Chain Design and Optimization platform given the exceptional customer service and rapid time-to-value for solutions.

The initial project Tessenderlo tackled was to optimize supply chain costs for two of its core product offerings. These products were produced and distributed out of multiple plant locations. This situation created complexities around competing production resources, available storage and transportation assets. With the guidance of the anyLogistix team the Tessenderlo Supply Chain Analytics practice decided on the following approach:

1. Create a baseline scenario model to best understand the current state of the supply chain with a key focus on:
   • Plant capacity utilization
   • Production costs allocation
   • Transportation spending
   • Terminal distribution costs
2. Run a series of scenarios to identify an array of optimal methods to serve end customers. The primary objective was to uncover how asset utilization and associated cost (plant, production, storage, transportation, etc.) varied when shifting production & distribution among the various plants.
3. Review the top 10 scenarios with the Tessenderlo key stakeholder project team to validate the results and decide on the most appropriate future state scenario to implement.

OUTCOME:

By utilizing the anyLogistix platform, the Tessenderlo team achieved the insight and confidence needed to properly redeploy their production and distribution strategy for the two products in North America. Savings identified by the project were approximately $1.4m annually.

Given the success realized by the organization’s first project, the project team will march forward taking a similar approach to the remainder of Tessenderlo’s products and network challenges to identify further opportunities for savings. To ensure continued success and maximize the ROI of optimization-driven Supply Chain transformations, the organization plans to leverage the anyLogistix platform capabilities regularly to maintain a pulse on operations while also validating supply chain cost optimization findings.

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