Armstrong World Industries Improves Decision Making in the Supply Chain with IBM ILOG LogicNet Plus XE

Published on 29-Nov-2010

Validated on 20 Dec 2012

"LogicNet Plus XE’s ease of use and great reporting has allowed our modeling team to sit down with the internal customers and review the results—it is very clear and clean process. The internal customers really trust the model. We have been impressed with the improvements IBM has continued to make in the tool—the ease of use improves with each release." - Michael J. Griffiths, General Manager, AFP Logistics, Armstrong World Industries

Customer:
Armstrong World Industries

Industry:
Consumer Products

Deployment country:
United States

Solution:
Smarter Commerce

Overview

Armstrong World Industries, Inc. is a global leader in the design and manufacture of floors, ceilings and cabinets with a focus on innovation, design and environmental sustainability. In 2009, Armstrong’s consolidated net sales totaled approximately $2.8 billion. Based in Lancaster, PA, Armstrong operates 35 plants in nine countries and has approximately 10,200 employees worldwide.

Business need:
Armstrong World Industries (Armstrong) operates a complex supply chain. The 35 plants across nine countries have multiple production lines, have different capability, make multiple types of products, are organized into different business units and geography, and support a multiple distribution centers and many customers.

Solution:
Armstrong created a central group with responsibility to model their supply chain and answer the questions from the different business units and geographies. Armstrong selected IBM ILOG LogicNet Plus XE (LNP XE) as the modeling tool because of its capability to model both manufacturing and distribution, its ease of use, and the excellent support.

Results:
Because models are archived and data is readily available, the group can quickly complete ad hoc studies.

Benefits:
By having this capability, Armstrong has taken significant transportation, warehousing and manufacturing costs out the supply chain; added capacity in growing markets in a timely manner; removed capacity in shrinking markets; responded when major customers restructured their supply chain; answered many questions to help improve the supply chain

Case Study

Armstrong World Industries, Inc. is a global leader in the design and manufacture of floors, ceilings and cabinets with a focus on innovation, design and environmental sustainability. In 2009, Armstrong’s consolidated net sales totaled approximately $2.8 billion. Based in Lancaster, PA, Armstrong operates 35 plants in nine countries and has approximately 10,200 employees worldwide.

Challenge:
Armstrong World Industries (Armstrong) operates a complex supply chain. The 35 plants across nine countries have multiple production lines, have different capability, make multiple types of products, are organized into different business units and geography, and support a multiple distribution centers and many customers. Armstrong sells directly to retailers and through distributors.

With this complexity, Armstrong’s supply chain and logistics managers always have questions:
· When market conditions change, should we add or subtract plants and warehouses, and if so, which ones?
· If a customer changes their supply chain, how should we respond?
· When distributors come or go, how should we shift territories?
· When the demand of individual products change, what plants should make which items and how many plants should make an individual item?
· If we open a new plant, what should it make? If we close a plant, where should we move its current products?
· If our product moves into new retailers, which distributor should service the new stores?

Management realized that they could not do this type of analysis manually. The complexity requires optimization technology to sort through the possibilities, include all relevant data, and return good solutions. Armstrong needed a repeatable process to efficiently answer these questions and ensure that the supply chain decisions were correct from the start.

Solution:
Armstrong created a central group with responsibility to model their supply chain and answer the questions from the different business units and geographies.

Armstrong selected IBM® ILOG® LogicNet Plus® XE (LNP XE) as the modeling tool because of its capability to model both manufacturing and distribution, its ease of use, and the excellent support.

Armstrong has been using LNP XE since 2004, doing about three to four major studies per year and a large number of ad hoc studies. They archive models when complete, maintain a good database of raw data, and have developed and saved a number of queries to extract raw data.

A major study would analyze the footprint of the supply chain. It would consider additions or subtractions to the number of facilities in the network.

Because models are archived and data is readily available, the group can quickly complete ad hoc studies. These studies help re-do a budget, examine the service territory of a warehouse, re-examine a previous decision with new information, decide where a new product should be made, map a customer’s new supply chain, visualize the supply chain, or determine whether a capital investment decision should be taken.

Benefits:

By having this capability, Armstrong has
· taken significant transportation, warehousing and manufacturing costs out the supply chain
· added capacity in growing markets in a timely manner
· removed capacity in shrinking markets
· responded when major customers restructured their supply chain
· answered many questions to help improve the supply chain

Some business units within Armstrong do not make a change or investment without consulting with the central modeling team. Sometimes the modeling results confirm the preconceived notions and sometimes the results cause people to change their mind. In all cases, the process makes the managers in the business think more rigorously about the problem and allows for better solutions.

Besides answering the questions posed, Armstrong’s interactive modeling process provides its managers with a deeper understanding of their supply chain and often uncovers improvements that were not being considered. The business manager and someone from Armstrong’s central modeling team sit together and review the scenarios. LNP XE’s interactive reporting and mapping allow the business manger to probe deeply into the scenarios, understand the fine details, gain additional insight, and, often, suggest new alternatives.

For example, the manager can explore which products were moved to new plants, which transportation lanes changed, how the overall volume changed at each plant and warehouse, and which plant or warehouse was shut down and why.

When the managers interact with the model, Armstrong gets better results.

The robustness of the optimization, ease-of-use, powerful reporting and support of LNP XE allows Armstrong to maintain this capability over time.

Products and services used

IBM products and services that were used in this case study.

Software:
IBM ILOG LogicNet Plus XE

Legal Information

© Copyright IBM Corporation 2010 IBM Corporation Software Group Route 100 Somers, NY 10589 U.S.A. Produced in the United States of America November 2010 All Rights Reserved IBM, the IBM logo, ibm.com, ILOG and Logicnet Plus are trademarks of International Business Machines Corporation in the United States, other countries or both. Other company, product and service names may be trademarks or service marks of others. References in this publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates.

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