Johnson Controls reduces supply chain spend with IBM ILOG LogicNet Plus

Published on 09 Jul 2012

"I’m using LNP XE every week to perform modeling on a variety of projects from small capacity analysis/capital investment decisions to quarterly financial forecasting and annual budgeting for capacity utilization, plant manufacturing, and shipping territories. LNP XE has allowed us to create clear pictures of our network, starting with a best-case utopia state and then quantifying the impact of each constraint." - Chad Montgomery, Supply Chain Network Strategy Manager, Johnson Controls, Inc

Customer:
Johnson Controls

Industry:
Automotive

Deployment country:
United States

Solution:
Cloud Computing, Industry Framework , Smarter Commerce

Overview

Johnson Controls Power Solutions delivers batteries to its more than 10,000 customer locations on a regular basis. This world-class delivery operates within a closed-loop battery supply chain. On delivery of batteries to its customers, Johnson Controls picks up spent batteries at each location. The spent batteries are then transported to a licensed smelter for recycling. The recycled products are sent back to Johnson Controls battery plants. Raw and recycled materials are manufactured into new batteries which starts the closed-loop process again.

Business need:
Johnson Controls was looking for a supply chain management solution that would allow it to make informed decisions quickly, while optimizing their efficiency at every point of the supply chain lifecycle.

Solution:
Johnson Controls selected a supply chain management solution built around IBM ILOG LogicNet Plus XE. The solution provided the company with an accurate model of their supply chain that contributed to quick analysis and better decision making.

Benefits:
The capabilities offered by the IBM ILOG LogicNet Plus XE solution allowed Johnson Controls to embed optimization deep into their supply chain, helping to reveal hidden savings opportunities and optimize supply chain efficiency.

Case Study

Johnson Controls Power Solutions delivers batteries to its more than 10,000 customer locations on a regular basis. This world-class delivery operates within a closed-loop battery supply chain. On delivery of batteries to its customers, Johnson Controls picks up spent batteries at each location. The spent batteries are then transported to a licensed smelter for recycling. The recycled products are sent back to Johnson Controls battery plants. Raw and recycled materials are manufactured into new batteries which starts the closed-loop process again.

Challenge

The complex closed loop supply chain structure can be costly if not executed with world-class practices. The coordination of delivery, pick-up, purchasing and manufacturing of the batteries and materials needs to be well planned with customers and suppliers. This requires Johnson Controls to make optimal decisions with how the supply chain activities are executed:
• Which suppliers and facilities should be used to optimize
transportation costs?
• How much capacity should be contracted with each supplier and
facility?
• Which battery plant and distribution center should serve which
customers?

Johnson Controls determined the best way to make these decisions effectively was to employ technology that allowed them to optimize every move within the supply chain.

Solution

Johnson Controls selected IBM ILOG® LogicNet Plus® XE (LNP XE). LNP XE enabled Johnson Controls to build a model of its supply chain to guide decision making. LNP XE facilitates quick analysis of the tradeoffs between production, warehousing, transportation costs, carbon footprint, and service requirements; as well as the calculation of the optimal network configuration for different cost and service objectives.

Johnson Controls updates the model by collecting data from across the organization. Operations, purchasing and transportation departments continually provide updated costs, rates and capacity to support the model.

LNP XE has become an integral and ongoing part of the supply chain planning at Johnson Controls. LNP XE’s ease-of-use, functionality, and ability to model a complex closed-loop network allows Johnson Controls to embed optimization deeper into its supply chain and join the growing list of companies using advanced analytics to drive smarter decisions.

About Johnson Controls

Johnson Controls is a global diversified technology and industrial leader serving customers in more than 150 countries. The company’s 162,000 employees create quality products, services and solutions to optimize energy and operational efficiencies of buildings; lead-acid automotive batteries and advanced batteries for hybrid and electric vehicles; and interior systems for automobiles. This company’s commitment to sustainability dates back to their roots in 1885, with the invention of the first electric room thermostat. Through their growth strategies and by increasing market share they are committed to delivering value to shareholders and making their customers successful. For additional information, please visit http://www.johnsoncontrols.com
.

Components

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

Software:
IBM ILOG LogicNet Plus XE

Legal Information

IBM Corporation Software Group Route 100 Somers, NY 10589 Produced in the United States of America June 2012 IBM, the IBM logo, ibm.com, 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 “Copyright and trademark information” 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 performance data and 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. ZZC03194-