Papyrus, a leading European paper wholesaler, started using AIMMS in May 2014 to implement radical changes in its supply chain network and re-envision its forecasting, replenishment & supplier management workflow. The company’s supply chain supports more than 68,000 customers in 20 countries from warehouses and cross-dock platforms strategically located across Europe. Historically, every region was served by a warehouse that stocked an estimated amount of paper to meet local demand. Suppliers delivered to approximately every warehouse, with long lead times of four to five weeks. Due to high MOQs and fragmented demand spread out across a large number of warehouses, deliveries were infrequent. This was a high stock solution which the company could no longer afford due to a secular decline in the demand for paper and the global economic crisis. To overcome this challenge, the company would need to embark in a supply chain transformation journey to reduce cost and inventory while improving availability.
A systems roadblock
After identifying their need, it became apparent that Papyrus would also require better planning support. The company was using SAP with three different templates in groups of countries — each being differently configured with respect to replenishment. With limited time and budget, Papyrus decided to use AIMMS as a shortcut for harmonizing the different ERP variations that they had. Thanks to this quick solution, the company is now able to move towards a future supply chain where:
- The number of stockholding locations will reduce dramatically, and therefore the amount of movement within their network will increase
- Cross-border and intra-regional supply will increase
- Suppliers will reduce lead times in return for more accurate forecasts
- Operation with suppliers will take place in non-traditional, collaborative ways
- Planning will be centralized
Embracing complexity with better planning support
With this new supply chain setup, the company’s planners will face a more complex network structure. Papyrus is working with AIMMS and Districon, an AIMMS implementation partner, to develop Pharos – a new planning and control platform that will help the company implement and support this supply chain concept.
The company chose Pharos/AIMMS for five reasons:
- They wanted a system that could consolidate information from different SAP installations, with minimum development
- They wanted a planning system that could model all relevant constraints, and which could therefore create sets of Purchase Orders and/or internal stock transfer orders, without further manual intervention before being sent to the supplier.
- They wanted to be able to make operational optimization decisions during planning. For instance, they wanted to know when to buy or move; fill internal trucks, direct deliveries.
- They wanted a system that could support non-traditional supply agreements with suppliers (eg. IP single order concepts)
- They wanted a system that had the flexibility to support future needs, and especially an expanded context for optimization.
Rolling out Pharos
After a successful development period, Pharos is now able to calculate purchase orders for supplier country combinations automatically. But this is only the beginning. Papyrus wants to automate their purchasing process in Pharos even further so orders can be sent automatically to suppliers with the most accurate information, taking full truck requirements, warehouse capacity and mill specific restrictions like lead times and combinations into account.
Pharos is currently being rolled out to the main countries in Papyrus’s supply chain network. Preliminary results include:
- A daily cycle of planning and optimization executed by a central planning department
- A reduction in stock and a slight reduction in stock locations
- A better and leaner physical network and, thus, reduced cost
Expanding optimization capabilities
Thanks to the flexibility of AIMMS, Papyrus will also be able to extend the scope of operational optimization within its supply chain network. Bob Woodburn, SVP Supply Chain Papyrus group said: “Most tools can only do one thing, like inventory management or production scheduling. AIMMS can do integrated planning so we can combine inventory and production optimization, and gain insight into both distribution costs and manufacturing costs.’’
The company is planning to leverage AIMMS for:
- Cost to Serve optimization: Papyrus can classify/prioritize clients using AIMMS and offer different service levels, making sure the right clients get the right volumes while respecting its own margins. With this, the company’s team will have better information to engage with clients and can make more profitable decisions.
- Dynamic Pricing: Dynamic pricing will help Papyrus optimize its product revenues.
- Transport Optimization: Papyrus has different types of clients with different delivery requirements. Their current planning system does not take these differences into account. With AIMMS, they can segment their clients’ needs and more accurately reduce their transport costs while adhering to service levels.
Download our case study to learn more.