Inventory optimization solution improves lube supply chain, reduces forecast errors by 30%

Client Background

• Client:An oil and gas supermajor
• Operations: In over 70 countries
• Services:Dominant presence in lubes value chain. Manufactures and distributes industrial and specialty lubricants. Has more than 25lube plants to process, blend and fill multiple variety of lubricantSKUs

Challenge

The O&G supermajor was facing several business challenges as their IT systems and processes did not support their supply chain planning or demand forecasting. It didnot also support the Demand Forecast Accuracy (DFA) up to the desired levels required to meet their targets for service levels, inventory days of supply, supply chain operating costs. Top down forecasting led to huge demand-supply gaps, high stock levels at plant and warehouses, frequent stock-outs at demand end and over production at plants due to very little visibility into real-time demand. Forecast error rates were high as well.

In addition, short-term demand planning and distribution scheduling involved huge manual efforts.

As a result, the O&G supermajor’s lube businesstook a major hit, impacting top line, bottom line and market share. Theyneeded to build demand sensing capabilitiesfor their lube business to improve forecastaccuracy and supply chain strategy.

Solution

Wipro stepped in as the “thought-to-finish” partner for the O&G supermajor in this marquee demand sensing transformation program, delivered Proof of Concept (POC)to scale up across geographies and locations. The solution was pilotedin the markets of West Europe and South East Asia.

We deployed a COTS-based demand sensing and multi-enterprise inventory optimization solution that was supported in business case development.

After having gathered business requirements, we engaged industry analysts to map solution provider landscape against the business-validated requirements.Wipro worked with the O&G supermajor’s business and IT teams to develop and approve the business case.

In the execution phase, we supported procurement with negotiating, contracting and supplier onboarding. We managed through the entire project life cycle from requirement analysis, design, build, test, deploy and rollout of the demand sensing solution, worked continuously with key stakeholders to define to-be processes, solution architecture, service model and benefits realization methodology.

Here is a snapshot of what we deployed for the O&G supermajor.

Business Impact

As Wipro partnered with the O&G supermajor from thought to finish, the inventory optimization program helped delivered some of these benefits:

• 30% reduction in forecast errors in 9 months, resulting in more than 92% On Time In Full (OTIF)
• 30% reduction in safety stock over the same 9-month period
• 10% reduction in cycle stock, thereby reducing inventory costs and improving supply chain efficiency
• Inventory reductionled to annual savings of $16 millionin supply chain costs

Wipro led the entire business transformation, right from ideation, discovery, solution identification, business case definition to implementation across the O&G supermajor’s supply network that resulted in hundreds of millions of dollars in inventory reduction and double-digit service-level increase

- Sebastian Ennulat, ‎Partner & Global Offering Head Intelligent Supply Chain, Strategy & Transformation Consulting at Wipro