SAP Customer Success Story Chemicals DuPont DuPont: Finding a Formula for Success with Efficient Inventory Planning
E. I. du Pont de Nemours and (Dupont) Industries Chemicals, life sciences Products and Services For a range of markets including agriculture, nutrition, electronics, communications, safety and protection, home and construction, transportation, and apparel Web Site www.dupont.com SAP s SAP Enterprise Inventory Optimization application by SmartOps Getting the right product to the right customer location at the right time is key to commercial success for any company. But with more than 6,000 product lines across 13 business units and operations in 90 countries, this is a challenging task for DuPont. The company decided to integrate its inventory management using the SAP Enterprise Inventory Optimization application by SmartOps. As a result, it has reduced costs by cutting excess safety stock while improving customer service. 2
Innovation powered by science Based in Wilmington, Delaware, DuPont has been harnessing the power of science to develop innovative products since 1802. For more than 200 years, DuPont has brought world-class science and engineering to the global marketplace through innovative products, materials, and services. Their market-driven innovation introduces thousands of new products and patent applications every year, serving markets as diverse as agriculture, nutrition, electronics and communications, safety and protection, home and construction, transportation, and apparel. Today, DuPont is partnering with others to tackle the unprecedented challenges in food, energy, and protection now facing our world. With the global population expected to approach 9 billion by 2050, DuPont is working with customers, governments, NGOs, and thought leaders to discover solutions to today s toughest challenges. DuPont believes that together they can provide enough healthy food for people everywhere, decrease dependence on fossil fuels, and protect people and the environment for generations to come. From its beginning as a manufacturer of high-grade black powder for explosives, the company has evolved to meet changing customer requirements by applying first-class science to succeed in new markets. With recent acquisitions enabling DuPont s move into the food and agribusiness sectors, the US$37.9 billion company now employs 70,000 staff worldwide. Continuing its rich heritage of scientific innovation, the company has so far been awarded over 37,500 patents. 37,500 Patents awarded since 1802 3
Responding to dynamic markets In the new consumer-based markets that DuPont has entered, such as food and related ingredients, it is critical to react quickly and dynamically and respond appropriately to fluctuating demand. However, reliance on manual forecasting spreadsheets meant that DuPont had the opportunity to manage its inventory in a more efficient and cost-effective way. A static approach to demand planning could result in safety-stock levels remaining unchanged for a period of time. We wanted to take a more scientific approach to our inventory planning, looking at historical data to update safety-stock targets more regularly, says Cathi Garito, IT Application Specialist at DuPont. We also wanted to work in a more integrated way, looking at the supply network as a whole so that we don t duplicate the amount of stock needed. With smarter inventory planning, we have the opportunity to improve customer service while reducing costs. Cathi Garito, IT Application Specialist, DuPont 4
Established SAP software infrastructure DuPont decided to invest in a solution that would assist the decision-making process for optimized inventory targets across the supply chain. The new software would need to provide automated updates on changing demand in a dynamic market. Following a detailed vendor review process, the company decided to implement SAP Enterprise Inventory Optimization. SAP Enterprise Inventory Optimization integrates with the SAP Supply Chain Management application to determine demand-driven inventory targets for every item at every location throughout the supply chain. According to Kent Ping, Senior IT Consultant at DuPont, the company wanted commercially available software. Integration with the SAP ERP application also was a factor in its choice of inventory optimization software. We re an established user of SAP software and wanted a solution that would integrate with our existing infrastructure. SAP Enterprise Inventory Optimization meets this requirement and enables us to view our entire supply chain at the touch of a button. Kent Ping, Senior IT Consultant, DuPont 5
Sharing experiences and refining processes So far, DuPont has deployed SAP Enterprise Inventory Optimization across 20% of its businesses. However, the implementation has not been without its challenges. At first, data quality was a real issue for us, remarks Garito. Each business is structured differently, so we had to spend a lot of time understanding data flows to ensure we had the correct information in the correct format to feed into the solution. buy-in. No matter how sophisticated the tools we have, project success is dependent on gaining the confidence of the people using the solution, comments Garito. With this in mind, IT staff and internal supply chain consultants worked hand in hand with the businesses to look at their processes and identify ways in which SAP Enterprise Inventory Optimization could best work for them. Experts from SmartOps worked closely with the DuPont project team to get the job done. It was a very collaborative project, and SmartOps helped us get where we needed to be, confirms Garito. Another key challenge facing the company was communicating the changes to its staff and getting their As well as detailed predeployment planning sessions, DuPont also holds a monthly user group meeting where representatives of each business can raise issues and share successful approaches. User feedback is helping us to speed up future implementations and refine our processes as we continue to implement the solution across the company, highlights Garito. We ensure we have the right people involved in the project. Cathi Garito, IT Application Specialist, DuPont 6
Multitier stock management With SAP Enterprise Inventory Optimization in place, business units at DuPont can view a network model of supply chains for over 2,000 product lines. The solution looks at the entire supply chain and identifies the current amount and location of each item of stock across the chain. It then calculates optimal safetystock targets required to meet demand without running out of stock, while fulfilling customer service targets for timely delivery. By analyzing historical data, the solution continuously updates forecasted targets, taking into account variable factors such as demand and supply. According to Garito, SAP Enterprise Inventory Optimization helps us to be better prepared to meet changing requirements so we can be confident that we have the products we need, where we need them. 2,000 Product lines 7
Continuous improvement DuPont has achieved significant savings thus far, and these savings will rise as the organization continues to deploy the solution across its remaining businesses. SAP Enterprise Inventory Optimization enables each business to analyze the link between inventory and customer service levels. Sometimes repositioning stock to maximize revenue is the answer, Garito notes. The software helps the businesses make decisions so that they are better prepared to provide excellent service to customers. Business units with the software in place have reported successes in different ways. The Packaging Graphics division has benefited from an 8% reduction in inventory, directly attributed to reduced stock levels through more efficient inventory management. The MCM Resin division has significantly improved customer service levels across its supply chain, and the HPF business anticipates cutting its inventory by 5%. Another benefit of the solution is that it gives the businesses a holistic view of their supply chain identifying inputs and outputs at each stock point. This enables them to review and improve processes. SAP Enterprise Inventory Optimization helps the businesses see their supply networks clearly and ask themselves, why are we doing that? comments Garito. They can constantly evaluate and reevaluate the way they work to improve their supply chain processes. 8
DuPont Long-term strategy DuPont has plans to include dashboard functionality so that business managers can view at-a-glance inventory information within analytics solutions from SAP. And as DuPont s businesses come to grips with the solution, they are identifying where the Six Sigma methodology can be applied to improve processes and achieve their long-term goals. With SAP Enterprise Inventory Optimization, we can undertake Six Sigma activities to make improvements on an ongoing basis, remarks Garito. In this way, we can achieve significant advances in our operational efficiency. She concludes: By helping us to be more dynamic and responsive in fast-moving consumer markets, the SAP solution is helping us to be more competitive and sustain that edge. CMP18103 (12/08) Copyright/Trademark Privacy Impressum 9