Cooper Tire & Rubber Co. can point to a long history of success in selling its products to the automotive aftermarket. But the company had little experience in modeling its North American distribution network. All that changed recently, when Cooper decided it was time to bring some rigorous analysis to the way it made and stored product across the continent.
Cooper had done a small amount of internal network modeling, but the staff that was involved had moved on to other assignments. Now it wanted to make the process "an ongoing exercise," says Robert A. Sager, manager of supply chain research and design. For consulting expertise, Cooper turned to Atlanta-headquartered Chainalytics LLC.
With little in the way of past efforts, Cooper was forced to start from scratch. Partnering with Chainalytics, it looked at every corner of the North American network-where and how product was stored, and what levels were required to serve customers.
Cooper, which serves only the replacement market, has four production plants, each with a warehouse attached, in addition to six straight distribution centers strategically located around the country. (It fills in with contract warehousing during peak sales seasons.) The company makes a mix of product, including both house brands and private labels for major retailers.
To get the ball rolling, Cooper drew on Chainalytics's established methodology for building a network model. The effort was carefully documented so that Cooper could later repeat the process in-house on a periodic basis.
The company took an especially close look at the U.S. Midwest and Northeast, home to a hefty percentage of its customer base. It discovered numerous opportunities for consolidation and cost savings. With some 20 separate brands to manage, it did some shifting of product to better reflect customer needs.
One big benefit of the Chainalytics engagement was that it gave Cooper hard numbers to support tough decisions on the redistribution of inventory. "In the past," says Sager, "we had guys in supply chain, marketing, and at the factory, all with ideas about where product should be, and how we should provide service to the customer. The network modeling tool was basically data-driven, so once everybody agreed on the model, we could back it up."
Into the model went all of Cooper's historical sales, inventory and transportation data. Looking to base production as close as possible to the customer, the model devised an initial solution that was unrealistic from a manufacturing standpoint. Cooper responded by locking in build plans at the four locations, then allowing distribution decisions to "float" in accordance with market needs.
Sager expects to draw on Chainalytics's expertise for additional projects, including the use of "what-if" scenarios to tweak the model. "We've set up an open agreement with them," he says. "As these things arise, we will have their support."
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