Next level supply chain, provided by artificial intelligence
140 production sites, more than 200 warehouses and around 70,000 products are forming the backbone of Henkel Adhesive Technologies. While these figures sound reasonable, calculating the number of all their possible combinations would result in a value beyond the human imagination. For our Global Supply Chain team in Amsterdam, it’s part of everyday life to deal with such big data and the opportunities arising from its interpretation. Artificial Intelligence and smart planning tools support the logistics experts in optimizing both material flows and workflows.
By digitalizing supply chain logistics, Henkel creates the basis to stay up to date with market trends, improve the service level to our customers and gain efficiencies to stay competitive in the market. Using data-based technologies such as simulations and track-and-trace software, the business unit enhances transparency along the supply chain and paves the way for further improvements and new services.
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The ideal warehouse: Revolutionizing a grown structure
For decades, supply chain managers planned a warehouse to be as close as possible to the company’s production sites. Nowadays, the ideal location is primarily determined by market requirements, and is consequently rather close to the customer’s plant. In this way, just-in-time orders can be handled while transportation costs are reduced.
Henkel also follows this approach, using a smart software to rebuild the grown warehouse structure. The tool creates a virtual image of the network, a so-called digital twin, which allows the team to simulate different scenarios. Additionally, integrated algorithms are able to process complex mathematical tasks. For example, they can calculate the optimal distribution network for a product, taking into account limited storage capabilities at specific sites, as well as customer requirements for lead times. These simulations are useful to discuss the pros and cons of different options and to plan roles and responsibilities.
Since 2013, the data-based optimization of material flows led to a shift in Henkel’s warehouse landscape, with 70 new warehouse openings and 120 closures. The new distribution center in Bönen, Germany, is the latest milestone on the way to establish a network with maximum capacity utilization. It’s Henkel Adhesive Technologies’ biggest warehouse worldwide, with an area of 57,000 square meters and 300 employees. On average, 70 trucks per day are handled, predominantly delivering to customers in Germany and Western Europe.
Transportation: Always on track
Daily transport logistics can also be further optimized with the help of intelligent software solutions. Henkel’s supply chain specialists use a Transport Management System for this purpose. The tool retrieves the delivery orders created in SAP and consolidates them as efficiently as possible. Algorithms are also used here, in order to calculate multi-pick or multi-drop options, as well as a combination of both. The benefits are obvious: Transport planners optimize the consolidation of loads and achieve the best possible truck utilization reducing both the CO2 footprint and costs. Moreover, the tool enhances cost transparency, assigning transportation costs to every single transport planned.
In addition, Henkel Adhesive Technologies has implemented a track-and-trace solution for trucks in North America and Europe.With its live-tracking function, the tool allows employees across functions to see the exact arrival times of each truck. This functionality helps to anticipate delays and, as a consequence, improves the customer experience through faster and more accurate information, as well as planning potentially needed actions, such as the need for express shipments. Track-and-trace solutions also enable new data-based insights, providing planners with information about load-volumes and on-time performances by hour.
Results: Significant improvement in sustainability and productivity
Combining multiple smart software solutions to modern planning tools, Henkel Adhesive Technologies realized both economic and ecological benefits across the global supply chain. Overall, logistics contributed to substantial productivity gains which helped to fully compensate inflation over several years.
Furthermore, Adhesive Technologies reduced its carbon footprint per ton sold by 24 percent in 2019, compared to 2015 levels. Our efforts to optimize transport and warehouse logistics thus contribute significantly to Henkel’s overall climate strategy.
In the meantime, our Global Supply Chain team will not run out of work: Further improving our supply chain will continue to be high on our agenda. With new technologies, as well as new products and customer requirements coming up, the optimization of logistics is a steady process, to best meet our customers’ needs.