Supply Chain Design: Insights from CHEP’s Journey to Continuous Improvement

One of my predictions from a couple of years ago was that more companies would treat Supply Chain Design as a continuous business process instead of a standalone project or a once-a-year exercise. A company that has successfully gone through this journey is CHEP, a leading provider of pallet and container pooling services. On a recent episode of Talking Logistics, I spoke with Steve Wetter, Senior Manager, Global Network Planning at CHEP to gain some insight and advice from their experience.

“Two years ago, we were predominantly doing the project-based approach,” explained Wetter. “The standard methodology involved scoping the project, developing the business questions we were trying to answer, gathering data, building validation models, identifying the optimized solution, and then presenting the business case and moving into implementation…We still use this approach in parts of the business where a once-a-year project is still sufficient, but what we were finding, particularly in some of the larger CHEP regions, was that it was becoming very difficult to keep up with all of the changes that were going on [in our supply chain].”

Therefore, about a year ago, CHEP began taking a more iterative and continuous approach to supply chain design. As Wetter explained:

“Instead of trying to refresh this big model, [we asked ourselves] what if we continue to make little improvements to it as this particular facility increases capacity, as this particular customer grows, as we gain more supply in this particular area? How do we continually make incremental changes to the model so that it accurately reflects reality, so that when a supply chain design question comes up we can query the model to help us get the answer quickly?”

Comparing and contrasting the two methodologies, “the continuous improvement approach allows very fast answers to questions as they come up because the model is already built, it’s already there, it’s just a matter of creating some scenarios against that model in order to get the answer of what your solution looks like,” said Wetter. “[In contrast], with the project-based approach, it can take 3-6 months to get that model fully up and running and have the results fully vetted.”

There are some special considerations involved with the continuous improvement approach, in terms of the number of resources required to do it effectively and the need to earn the trust of the business, as Wetter discusses in the short clip below:

Carlos Valderrama, VP Global Customer Success at LLamasoft, also participated in the conversation and I asked him if there were any common threads between CHEP’s journey and experience and those of other companies he works with.

“What we find is that companies center their structure around five different pillars,” said  Valderrama. “One is connectivity with the business, which we call the business link. Another is the leadership function within the Center of Excellence that guides those questions from the business and helps to put them into a design that the Center of Excellence can then process. You also have the data function that basically focuses on gathering the right data and validating it to build a model; the design function that builds the models and scenarios and does the validation; and then you have the operational link, a project management function that builds an implementation plan, and together with the people from the Center of Excellence, can track the status of the implementation and the results.”

Obviously, technology is a key enabler of Supply Chain Design processes. When CHEP was evaluating solutions and partners, what key capabilities was it looking for? What factors led it to select LLamasoft as a partner? Not surprising, ease of use and flexibility were important factors, as Wetter discusses in the clip below:

“We were looking for a solution,” said Wetter, “that was really easy to use, where we could have folks from the supply chain part of the business, who maybe aren’t quite as technical, being able to use the software and understand both the inputs and outputs.”

I encourage you to watch the rest of my conversation with Steve and Carlos to gain more insights and advice on how to leverage modeling technology for continuous supply chain improvement. Then post a question or comment and keep the conversation going!

Full episode: