Client Success Stories: Service Network Design
Client
- World's largest semiconductor equipment company with $4 billion in worldwide sales
- 44,000+ SKUs, 9 DCs, 600 vendors
Goals
- Redesign US spare parts network while meeting or exceeding multi-tier service level agreements (SLAs)
- Reduce inventory investment and expediting costs
Approach
- Determine the optimal size of the spare parts network, assign service locations to DCs and set optimal safety stock levels for each SKU while minimizing Total Cost to Serve
- Total Cost to Serve: Fixed/variable DC costs + inventory investment + transportation costs + expected expediting costs
Results
- 4.5% reduction in Total Cost to Serve while maintaining target response time and satisfying multi-tier SLAs
- 4 DCs closed; $10M annualized savings in inventory alone
- Results will be published in Interfaces, a premier refereed journal for supply chain practitioners
