Supply Chain Operations - Merger

Reviewed supply chain operations brought about by the merger of two electricity utilities

The Background

The newly created entity had historically operated two distinct distribution networks.

As a consequence of the coming together of the two networks, there was the potential for supply chain optimisation opportunities.

These potential optimisation opportunities had likely impacts on warehouse and depot property that needed to be also assessed in the context of the five-year plan for OPEX and CAPEX expenditures.

A common supplier base also offered the opportunity to develop alternative supply paths.

How the Siecap team helped

A three-phase approach was utilised to address the core questions sought to be answered by the study. These were:

Phase 1 Discovery.
Conduct site visits to the major warehouses throughout the states to understand and document site capacity utilisation and necessity.

Phase 2 Analyse and inform.
Using two years of historical data build a detailed profile of the operations flows, inventory, site productivities, purchasing patterns and transportation cost.

Phase 3 develop, test and recommend.
Utilising the business profile created in step 2, tested a series of scenarios and identify which concept provides the greatest realisable opportunity.

The Results

A logistics strategy was developed for the integrated business that laid out a pathway to:

Generate a $13m reduction in strategic inventories.

Retain the existing warehouse and depot footprint without the need to lock in an expanded footprint.

Reduce supply costs by $2m p.a. through implementing a revised material flow paths that would see the centralised cross docking of materials into the Brisbane DC prior to onforwarding to the rest of the state-wide network.

Reengineer internal processes to reduce material requisition response times and increase service levels.