Executive Briefings

Supply Chain Modeling and Optimization in a Global Business

TE Connectivity is a $13bn world leader in designing and manufacturing electronic connectivity products for a range of industries. Ruud Somers, director of global network design, discusses how the company uses supply chain modeling and optimization solutions to support the high service demands of its global network.

TE Connectivity’s supply chain spans 100 plants and 70 distribution centers around the globe, which sets up a constant battle against complexity, says Somers. “We have approximately 500,000 active SKUs, many of which we manufacture, and more than 1.4 million different components. That’s a lot of parts going back and forth between plants and customers. Fighting complexity and making sure we operate a lean supply chain while having the right products at the right place – those are our biggest challenges.”

Additionally, TE Connectivity is in a B2B industry that is not best in class when it comes to rapid delivery to customers, says Somers. “We felt the need to bring the speed of the internet and the expectations that people have when ordering online to the B2B domain,” he says. “One of the ways we can do that is by optimizing our inventory – positioning our inventory so as to enable quicker response to customer demands.”

Tackling those challenges requires “strong tools and strong methodologies,” Somers says. TE Connectivity established a network design group two years ago and implemented Supply Chain Guru from LLamasoft. We use their tools to do network optimization,” he says. “We load actual demand data to create a baseline flow of products and we hold that against other opportunities and scenarios to get ideas on how to improve our network.”

Supply chain networks used to be rather static, Somers says, but today “change is the only constant.” TE Connectivity’s customers are more frequently moving their production locations, he says. “We have to follow them and we have to do that quickly, and the speed at which they are moving has increased tremendously over the past few years. We see, for example, that many makers of automotive harnesses are moving production to Northern Africa to supply European markets. Basically we are moving where our customers are going so our network is constantly changing.”

TE Connectivity uses LLamasoft’s inventory optimization to decide not only where to hold inventory but what kind of inventory to hold, says Somers. “We can hold finished products or we can choose to hold partially finished inventory, which can be completed according to orders that come in,” he says. “We can model all these different options.”

To view the video in its entirety, click here

TE Connectivity’s supply chain spans 100 plants and 70 distribution centers around the globe, which sets up a constant battle against complexity, says Somers. “We have approximately 500,000 active SKUs, many of which we manufacture, and more than 1.4 million different components. That’s a lot of parts going back and forth between plants and customers. Fighting complexity and making sure we operate a lean supply chain while having the right products at the right place – those are our biggest challenges.”

Additionally, TE Connectivity is in a B2B industry that is not best in class when it comes to rapid delivery to customers, says Somers. “We felt the need to bring the speed of the internet and the expectations that people have when ordering online to the B2B domain,” he says. “One of the ways we can do that is by optimizing our inventory – positioning our inventory so as to enable quicker response to customer demands.”

Tackling those challenges requires “strong tools and strong methodologies,” Somers says. TE Connectivity established a network design group two years ago and implemented Supply Chain Guru from LLamasoft. We use their tools to do network optimization,” he says. “We load actual demand data to create a baseline flow of products and we hold that against other opportunities and scenarios to get ideas on how to improve our network.”

Supply chain networks used to be rather static, Somers says, but today “change is the only constant.” TE Connectivity’s customers are more frequently moving their production locations, he says. “We have to follow them and we have to do that quickly, and the speed at which they are moving has increased tremendously over the past few years. We see, for example, that many makers of automotive harnesses are moving production to Northern Africa to supply European markets. Basically we are moving where our customers are going so our network is constantly changing.”

TE Connectivity uses LLamasoft’s inventory optimization to decide not only where to hold inventory but what kind of inventory to hold, says Somers. “We can hold finished products or we can choose to hold partially finished inventory, which can be completed according to orders that come in,” he says. “We can model all these different options.”

To view the video in its entirety, click here