Inventory software cuts supply chain costs

Food manufacturers and suppliers are continually being squeezed by the conflicting objectives of meeting high customer service levels and keeping inventories down. As a result, many are turning to inventory optimisation software to make significant savings along the supply chain.

For example, four European food companies recently installed ToolsGroup's DPM inventory optimisation software. The firms, canned seafood company Conservas Garavilla, food distributor Gallina Blanca, pasta manufacturer Pastas Gallo and cheese producer Mantequerias Arias, believe that the technology will help them achieve both business objectives.

Conservas Garavilla is one of the leading food companies in Spain with sales revenues of more than $225 million. The group added ToolsGroup's DPM inventory optimisation solution to its SAP R/3 system in order to optimise inventory for its products.

In nine months, the company claims to have increased its service level (or line fill rate) to 98.3 per cent, without increasing inventories. Fresher products on the shelf have led to a solid improvement in customer satisfaction.

It also managed to reduce administrative costs by 20 per cent.

"With DPM, not only have we improved the service to our clients without having to increase inventory levels, but we are better able to predict the effect of new launches and promotions,"​ said Patxi Gomez, director of logistics for Conservas Garavilla.

At food distributor Gallina Blanca, ToolsGroup's DPM was applied to worldwide distribution strategy and is claimed to have reduced inventory by close to 20 per cent, with particular savings in the regional distribution warehouses. The distribution network covers 70 countries on four continents.

At Pastas Gallo, director of logistics Ernesto Gomez said DPM is helping them "reduce inventory, plan in advance for resupplying throughout the entire logistics network and improve the level of service."​

Headquartered in Barcelona, $250 million pasta manufacturer Pastas Gallo has five production centres throughout Spain. DPM complements its SAP R/3 ERP system, acting as a bolt-on module for inventory management and optimisation for all of its 450 dry foods and refrigerated products.

Leading cheese producer and distributor Mantequerias Arias chose ToolsGroup because of the company's knowledge of the supply-chain planning field as well as the company's experience, Arias said. Arias also highlighted its dynamic market, where it is essential to maintain high service levels and guarantee the freshness of its products.

ToolsGroup​ provides inventory optimisation software solutions for distribution-intensive businesses. Its stochastic solution optimises distribution chain inventory, from finished goods assembly to the end consumer, and from strategic network design to daily operations.

Other food and beverage companies to have implemented ToolsGroup technology include pasta manufacturer Barilla, Coca-Cola bottler Casbega, and yoghurt and bottled water provider Danone.

These firms have managed to increase customer service levels and reduce global finished goods inventory by between 10 and 50 per cent.