Panalpina cuts costs for its customers by up to 20 percent

Supporting supply chain optimization with a modern modeling solution

Published on 17-Sep-2013

"IBM ILOG LogicNet Plus XE offers advanced functionality, improving our ability to optimize global supply chains. Compared to our previous solution, the software features much richer capabilities and is much easier to use, helping us to cut the time and effort involved in generating optimizations by between 50 and 60 percent!" - Peter Karel, Global Head of Supply Chain Solutions, Panalpina

Customer:
Panalpina

Industry:
Travel & Transportation

Deployment country:
Switzerland

Solution:
Information Integration, Smarter Planet, Supply Chain Management

Smarter Planet:
Smarter Supply Chain

Overview

As profit margins are squeezed, manufacturers are forced to optimize their operations as much as possible to remain competitive. Many choose to leverage supply chain optimization, which eliminates unnecessary steps in processes and cuts costs. Increasingly, companies are turning to Panalpina for advice on their supply chain strategies. As a global player with the three core products air freight, ocean freight and logistics, Panalpina not only provides customers with strategic guidance regarding supply chain design and execution, but also puts the identified optimizations into practice.

Business need:
Panalpina strives to continuously improve its customers’ supply chains to help them increase the availability of their products in target markets, and to cut the time and costs involved in transporting goods. In the past, the company could pinpoint optimal locations for consolidation and distribution centers; it wanted to extend its offering by enabling the identification of optimal modes of transport.

Solution:
Panalpina installed IBM® ILOG® LogicNet Plus® XE, enabling analysts to simulate “what-if” scenarios, and create and visualize models of supply chains, taking into account factors such as special handling requirements for the goods being distributed, transport and logistics costs, delivery times, distances travelled, agreed service levels and inventory management strategies.

Benefits:
Cuts costs by 20 percent on average by optimizing modes of transport, inventory levels, and locations of distribution centers. Reduces time spent on analysis and modeling by between 50 and 60 percent using a graphical, user-friendly interface.Enables Panalpina to extend its service offering by leveraging the tool’s various modeling and analysis functions.

Case Study

Smarter Supply Chain: Cutting costs with intelligent supply chain optimization
Instrumented: The new solution combines data required for supply chain optimization, such as figures on transactions, logistics and inventory levels, in a central system.

Interconnected : Data concerning a company’s supply chain is stored in a central system, ready for analysis. The solution can provide users with graphical representations of the optimizations identified.

Intelligent : The solution provides new insights into weaknesses, cost drivers and different ways to optimize global supply chains. Panalpina can quickly model “what-if” scenarios, helping to improve delivery times and cut costs.

As profit margins are squeezed, manufacturers are forced to optimize their operations as much as possible to remain competitive. Many choose to leverage supply chain optimization, which eliminates unnecessary steps in processes and cuts costs. Increasingly, companies are turning to Panalpina for advice on their supply chain strategies. As a global player with the three core products air freight, ocean freight and logistics, Panalpina not only provides customers with strategic guidance regarding supply chain design and execution, but also puts the identified optimizations into practice.

Supply chain optimization enables companies to unlock significant time and cost savings. To make their products available in all target markets at the lowest possible price, companies need to optimally combine the respective advantages of various modes of transport (air, ocean, road and rail) with intermediate storage facilities, consolidation and distribution centers in the most suitable locations. These optimizations cannot be identified using traditional methods.

New demands require a comprehensive solution
As the first step in supply chain optimization, Panalpina closely examines a customer’s existing logistics processes, including the flow of materials, inventory levels, delivery routes, order quantities and modes of transport used. In the past, Panalpina used an analytics solution that could only identify optimal locations for intermediate storage facilities.

The company wanted to extend its service offering to include a wider array of optimizations, prompting Panalpina’s supply chain management team to look for a new solution that could provide additional functionality. The company evaluated various offerings available on the market, and decided to implement IBM ILOG LogicNet Plus XE. IBM Software Group Services trained Panalpina’s analysts, enabling them to exploit the full functionality of the software in their day-to-day operations.

Peter Karel, Global Head of Supply Chain Solutions at Panalpina, explains, “This software combines data on our customers’ businesses, transactions, logistics and inventory levels in a single system. We can add the data to our system easily, even though the data is primarily taken from the companies’ individual ERP or transport management systems, each of which is formatted differently.”

Advanced functionality offers a wider range of optimizations
IBM ILOG LogicNet Plus XE offers comprehensive modeling and analysis functionality as well as detailed graphical representations of findings, which help Panalpina’s supply chain analysts to simulate various scenarios using different locations, delivery capacities, factory buildings, production lines and processes. Staff use these simulations to identify possible weaknesses and to measure the effects that changes in parameters have on the various scenarios. The new insights enable Panalpina’s customers to base important business decisions on reliable data and to maximize the end-to-end efficiency of their supply chains.

Peter Karel explains, “When Panalpina’s analysts investigate optimizations, they simulate different networks and evaluate them according to transport and logistics costs, delivery times, service levels and inventory management. Customers can choose to optimize their supply chains according to the specific priorities of their business, such as offering the fastest delivery times, or minimizing costs. By eliminating unnecessary process steps, companies can reduce direct and indirect costs.”

Successes shared by customers
Supply chain optimization enables Panalpina to manage its own transport network more efficiently, and reduce transport and logistics costs for its customers.

Peter Karel says, “We conducted a research project for a leading global electronics company to analyze delays in the flow of materials between its European suppliers. We found that the structure of the existing transport network led to inefficiencies in the consolidation process, and increased the costs of managing the network. On Panalpina’s recommendation, the company established strategic flows of materials between suppliers, relocated its European consolidation center, and began using a combination of road and rail for goods transport, reducing costs by 21 percent and cutting CO2 emissions by 34 percent.”

In another example, Panalpina optimized the Europe-wide distribution of components manufactured by a company that specializes in designing and building custom machines. In this case, the challenge was to identify the number, location and size of distribution centers needed to transport goods from Asia most efficiently, and put this optimization into practice. Improving the supply chain and identifying the best import hubs to use reduced total costs by 23 percent.

Peter Karel summarizes, “IBM ILOG LogicNet Plus XE offers advanced functionality, improving our ability to optimize global supply chains. Compared to our previous solution, the software features much richer capabilities and is much easier to use, helping us to cut the time and effort involved in generating optimizations by between 50 and 60 percent! We are now able to take a much more comprehensive approach to supply chain solutions, and we hope to achieve strong growth in this part of our business. The new solution equips us with the tools we need for future success.”

Products and services used

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

Software:
IBM ILOG LogicNet Plus XE

Service:
Software Services for B2B & Commerce

Legal Information

© Copyright IBM Corporation 2013. IBM Deutschland GmbH. IBM-Allee 1. 71139 Ehningen. Deutschland. ibm.com/de. IBM Österreich. Obere Donaustrasse 95. 1020 Wien. ibm.com/at. IBM Schweiz. Vulkanstrasse 106. 8010 Zürich. ibm.com/ch. Produced in Switzerland. September 2013. IBM, the IBM logo, ibm.com, Let’s Build A Smarter Planet, Smarter Planet, ILOG and LogicNet Plus are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at: www.ibm.com/legal/copytrade.shtml. This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided.