A $1 Billion, globally-expanding US industrial company needed to address the complexity of its supply chain. Many of the existing processes were designed for their differentiated flexible customer order lead times, and heavily depended on a single expert with mounds of tribal knowledge of the US operations. He understood the way to make decisions based upon uncertainty in ordering raw materials, producing products in advance of orders by specific customers, determining where to warehouse them, and setting prices.
A senior executive in the company heard Professor Yaneer Bar-Yam speaking at a meeting on understanding global terrorism through complexity science. This customer felt that NECSI’s unique predictive modeling capabilities could be applied to complex supply chains.
We took 20 years of historical company data on inventory, customers, and shipping. We identified patterns in the data and produced: (a) an inventory management framework, including calculating accurate inventory levels, key metrics, and relevant information for decisions based upon risk analysis; (b) customer shipping protocols and (existing and new) warehouse location optimization; (c) predictions of future orders by customers, as well as customer attrition, up to several years in advance for customer relations management; and (d) a state-of-the-art visualization platform integrated with the ERP system for real time monitoring and operations decisions on inventory, products, orders, and customers.
“The sophistication of the analysis was apparent in providing new actionable strategic insights... for greater effectiveness and efficiency. Such analysis should be done by every major corporation.”
Goals
Calculate customer lifetime value (CLV) and improve customer retention
Obtain real-time visibility of supply chain
Optimize inventory and delivery to lower costs
Approach
After extracting, cleaning up and analyzing relevant data from both the client and public sources, NECSI used its unique combination of Complex Systems Science and AI to deliver:
Custom CRM with built-in algorithms that calculates CLV and alerts of unusual customer behavior in real-time
Recommendations to optimize inventory and delivery
Custom visualization dashboard with algorithms for visibility and continuous improvement of supply chain
Results
Project ROI of 35X
Inventory reduction: 20-30%, a value of $8M over 10 years
Shipping cost savings: 7% per year, a value of $14M over 10 years
Improved customer satisfaction due to rapid delivery