“We now have a resilient and industry-leading supply chain that enables us to continue growing in the UK and to manage our costs better in the future” says Chris Bosworth, Kwik-Fit's Marketing and Business Development Director.
Kwik-Fit's move to a 245,0002ft National Distribution Centre (NDC) at Corby gave the UK's leading fast-fit supplier of tyres the opportunity to take complete control of its stock, extend its supplier base to a global level and to provide its 670-plus UK outlets with a daily delivery service, six days a week.
Consolidating sourcing and distribution into a National Distribution Centre that houses 300,000 tyres in 1,600 different sizes and brands, provided the business with the opportunity to enhance its inventory management system – a move that has resulted in clearer visibility of demand trends, more control over the supply pipeline and a greater promotion capability as well as enabling Kwik-Fit to operate notably more effectively and efficiently at a substantially reduced cost.
In the year leading up to the supply chain redesign, the company identified opportunities to make its operation more effective, particularly in the areas of controlling supply into its retail centres and centralising product-sourcing from suppliers.
With a typical retail centre holding 900 tyres, replenished from a range of about 1000 parts, Kwik-Fit's supply chain had been characterised by short notice supply issues, high product cost as a result of manufacturers holding inventory on the company's behalf, poor availability stemming from high competition in an under produced market, and little or no product supply priority.
On top of these challenges, future trends were proving virtually impossible to forecast accurately and were also proving to be highly dependent on promotions – leaving the company exposed to 'bull-whips' whereby a successful promotion results in stock-outs followed by re-order deliveries coinciding with a tailing-off in demand.
To help resolve these issues, Kwik-Fit brought in its specialist supply chain software partner, Barloworld Optimus, whose advanced application Optimiza is the inventory optimisation powerhouse for dozens of the world's leading companies, including Ricoh, AutoGlass, Continental and Alstom.
“Coinciding with direct ordering from tyre manufacturers as far away as China, Kwik-Fit also recognised the need to enhance its capability to develop more accurate sales forecasts to cover the exposure to longer supply pipelines” commented Barloworld Optimus' Business Manager Graham Orr.
“It all comes down to having a supply chain that optimises inventory placement throughout the network whilst maintaining a dynamic capability to respond efficiently as business conditions change” he said.
Optimiza was integrated with its add-on stablemate forecasting application, Optimiza Demand Planner, to create a total solution, synchronising supply and demand.
Having the ability to manage promotional activities by channel within a product family forecast affords Kwik-Fit the luxury of being able to quickly and effectively plan for changes in market conditions or company strategy. With the high economic volatility experienced over the last year, these innovations have proved invaluable in ensuring that the supply chain is agile enough to respond and adjust without sacrificing service or overly compensating with layers of inventory.
With retail centre capacity viewed a major constraint in the solution, accurate inventory levels that dynamically adjust to forecast changes and promotional activities are key to ensuring high availability at the lowest possible inventory level. The new system not only manages these dynamic levels, but also generates orders for all 670-plus centres based on customised constraining logic subject to each item's criticality every night within a four-hour processing window.
“For us at Barloworld, achieving results is as important to us as it is to the people that we work with” says Barloworld Consultant Grant Crosse.
“Kwik-Fit have inspired us through their dedication to deliver first-class customer service, and through the Barloworld systems we hope to have inspired them to exceed what they thought was possible” he said.
The Optimiza 'Balanced Scorecard' provides high-level data allowing for all Kwik-Fit's retail centres and NDC to be consolidated into an instantly-visual report containing key areas of forecasting accuracy, supplier performance, stock health analysis and quality of retail centre service.
Set to pre-agreed target levels, each block of the Scorecard corresponds to a key area of the inventory management process that allows for the entire supply chain to function as efficiently as possible and to obtain the best possible use from the Barloworld systems.
Within the business, the entire internal supply chain is now able to respond quickly to changes in brand mixes, market demand, new supercessions and projected manufacturing shortfalls. Routine supply forecasts are generated for all major suppliers for medium-term planning, and manufacturing slots are booked via blanket orders, allowing call-off orders to be raised on short lead times – resulting in the net effect of reducing costs, securing supply and ensuring on-request deliveries as and when required.
“The systems now in operation within the NDC will improve our stock availability, create considerable efficiencies and introduce a reverse-logistics capability” says Kwik-Fit's Head of Supply Chain, Neil Arnott.