Toll Today March 2011 - TOLL Group

Specialised and Domestic Freight
Toll Inventory Capital Solutions
Impresses Caterpillar
10
TOLL INvENTOry CAPITAL SOLuTIONS IS A SPECiaLiSED BuSINESS uNIT THAT HAS DEVELoPED
AND SuPPoRTS A FuLL FuNCTION INvENTOry AND DISTrIBuTION MANAGEMENT SySTEM.
THE METHODOLOGy CAN BE uSED By BuSINESSES INSIDE TOLL AND FOr CuSTOMErS OF THE
TOLL GrOuP.
The inventory management system is based on risk
management principles and is used for optimising
all classes of stock from raw materials through
to work-in-progress and finished goods. Where needed,
it includes demand forecasting, master production
scheduling and stock replenishment / procurement.
The Toll Inventory Capital Solutions system interfaces with
customer Enterprise Resource Planning systems and the
relevant Toll operations systems. The outcomes are usually
improved product availability, improved stockturns and
lowered operating costs.
Over the past 13 years, Toll Inventory Capital Solutions
has worked with a number of companies to improve their
inventory management, and has recently been working
closely with Caterpillar internationally on a number of
exciting projects.
ToLL inVEnToRy CaPiTaL SoLuTionS
anD CaTERPiLLaR
In 2005 the multinational equipment manufacturer, Caterpillar,
acquired a stake in a leading Chinese earthmoving machine
manufacturer Shandong SEM Machinery Co Ltd (SEM).
Based in Qingzhou, China the company had previously
been a hundred percent Chinese owned and had developed
their own operating systems over many years. When
Caterpillar took over the company they realised that
some of these systems were effective, but there was
also some room for improvement. Supply chain planning
and execution, with emphasis on demand forecasting and
inventory management was one of the disciplines that was
lagging behind the current state-of-the-art products this
function produced.
In early 2007, Toll Inventory Capital Solutions was invited to
present its ideas to Caterpillar’s management in Singapore.
The team quickly realised that it could potentially offer them
a very good solution for their newly acquired operation by
improving their inventory and distribution planning, as well
as the associated logistics services of warehousing
and transport.
The outcome of this meeting and the ensuing discussions
was that we were introduced to the Caterpillar China
management in Beijing and then to the SEM management
in Qingzhou to further discuss opportunities. As this was a
new market for Toll Inventory Capital Solutions, we invited
management from Toll Global Logistics to accompany us
to demonstrate Toll’s understanding and presence in the
Chinese market.
THE PRoPoSED SoLuTionS
Working with Toll Global Logistics in China, we developed
a solution that was well received by Caterpillar and the
SEM management.
The solution focussed on firstly getting a proper planning
methodology and system in place for the SEM supply chain
management. Secondly, we proposed to take over the
warehousing and transport services for SEM by using
the existing Toll Global Logistics infrastructure in China.
In particular we explored the options of increasing the SEM
footprint in China by using the regional Toll warehouses to
increase the number of stocking locations for SEM in China.
This could speed up delivery time to SEM customers and
prevent some lost sales for the business. Clearly this posed
an exciting opportunity for the team.
We presented various prototyped and modelled solutions
to SEM management.
These models and findings, together with a supporting
business case were presented to the SEM and Caterpillar
management and they agreed to start by implementing
the inventory solution. They will then look at the option of
using the Toll warehousing network further down the line.
After four months, the new inventory management system
was implemented and launched.