Inventory-Network optimization – Ameren

Case Study Snapshot

Results At A Glance

Transportation Savings

$1.47M

Disaster Scenarios

Tornado & Earthquake Modeled

Network

Optimized Stocking Locations

Key Takeaways

  • Baseline vs. optimal network comparison relocated stocking locations for efficiency.
  • Disaster scenario modeling created inventory staging policies for tornado and earthquake events.
  • Modeled impact of DC loss and major transportation route disruptions on service levels.
  • Playbook created for supply chain resiliency across all scenario types.

Where This Approach Fits

Best for utilities and infrastructure companies with acquisition-built networks needing inventory and resiliency optimization.

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Problem / Challenge:

Power utility needed to transform its supply chain including the inventory staging branches that it uses to support emergency repairs and maintenance to its network. The current network was built through a history of acquisitions and management wanted to explore if efficiencies could be achieved by rethinking the network locations and inventory staging decisions

Ameren Network Functionality

Ameren used one distribution center (Tier 1), and multiple stocking locations (Tier 2) to fulfill localized operating centers (Tier 3) that were close to major infrastructure and population centers (branches). See Figure on next page. The project needed to determine the optimal Tier 2 ‘stocking’ locations and assignments of Tier 3 operating centers to stocking locations.

IMPLEMENTATION DETAILS

  • Mapped baseline inventory flows from Tier 1 to Tier 2 to Tier 3
  • Gathered, consolidated and validated historical demand and transportation cost information
    • This step required extensive analysis and validation with business leaders and operations personnel
  • Modeled optimal versus baseline network design
    • See table at bottom of page 2
  • Modeled disaster scenarios for inventory staging policies
    • See page 2 (Sensitivity Analysis)
  • Ran scenario analyses for various cost increases and business initiatives
    • Results indicated MRO direct-to-tier 3 sites will not reduce costs

Project Timeline

Network Functionality

Current versus Optimal Operating Center- to – Stocking Locations

Current Stocking LocationsBaseline Demand Assigned LocationsOptimal LocationOptimal Demand Assigned Locations
MDF22MDF17
Jacksonville9Beardstown6
Marion4Marion7
Mattoon8Mattoon4
Pioneer Park2Pioneer Park4
Springfield1Springfield8
Total46Total46

Sensitivity Analysis

  • Disaster Recovery
    • Modeled impact of losing a Distribution Center due to natural or man-made disaster
    • Modeled impact of major transportation routes out of service (bridges & highways)
    • Created disaster ‘playbooks’ that are part of supply chain resiliency planning
    • Calculated impact to total costs
  • Significant Increase and Decreases in Transportation Cost
    • New stocking locations chosen
    • Network re-allocates stocking locations to mitigate shipping cost increase

Results

  • Identified $1.47 Million of transportation cost savings
  • Disaster scenario modeling created optimal inventory staging policies for tornado and earthquake planning

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