How Michelin Optimise Their Procurement Strategies

Global Tyre Company Michelin Use a Range of Strategies to Optimise Their Procurement, but How Has Digital Transformation Helped Them Improve Performance?

Fulfilment Transformation 

Michelin digitally transformed their fulfilment capabilities to help them synchronise relationships with their procurement partners, alongside their distribution centres and stores.  The company partnered with Blue Yonder on a SaaS-based fulfilment platform to initially transform its Camso division  which manufactures and supplies products for off-road vehicles, including off-road tires, wheels, rubber tracks and track systems for the material handling, construction, agriculture, and powersports industries.

The project has allowed for improved inventory management by aligning procurement with the demand from their network, and optimising decision making across their supply chain.  This has included establishing the optimal quantities of products to purchase from suppliers, to making sure the right inventory is being carried by distributors. The strategy also allows for better visibility of supply to plants, regional teams and logistics operations.  The phased project is seeing an increase of solution coverage from 10,000 item locations to 35,000 item locations. 

“We have a long and trusted global relationship with Blue Yonder, so we knew they were the right supply chain solutions provider to help us achieve our goals. The successful implementation of the Fulfilment solution has helped us advance our supply planning process from a disparate one to a more centralised one, which has improved our employee experience and ability to plan and make accurate decisions,” said Camille Demarquilly, vice president, Global Supply Chain Engineering, Michelin.

The solution has allowed Michelin to maximise sales by ensuring they position the right products and parts in the right distribution centres and stores. “Sense-and-respond” algorithms also enable Michelin to react to daily changes in demand signals, helping it avoid stock-outs and overstocks while improving inventory turns and product sell-through across the network to drive higher margins.

“As a trusted supply chain provider for Michelin, we are proud that they put their confidence in us to implement this first lighthouse SaaS project for them. Thanks to the successful implementation of Blue Yonder’s solution, Michelin has been able to leverage forecast and end-consumer demand signals to create an optimised, multi-level replenishment plan that is greatly benefiting its business and reducing overstocks,” said Terry Turner, president, Global Manufacturing, Blue Yonder.

AI Simulation Technology

MIchelin uses next-generation digital twins to help tackle their procurement and sourcing challenges. The company needed a robust simulation solution that could take into account key indicators such as service levels, CO2 emissions, inventory, distribution, plant capacity, and a wide range of product models, all within a complex manufacturing and distribution matrix. Using this modelling technology, the company could explore decisions over matters such as where to invest capital in building new manufacturing facilities.  Strategic sourcing is a regular challenge for Michelin, whose local-to-local strategy is to manufacture a product near the point of sale. Making the right decisions can speed up supply lines, reduce carbon emissions, improve service levels and substantially reduce its heavy logistics costs resulting in higher profits.

Michelin partnered with Cormo Tech to run more than 80,000 simulations, each with more than 3,000 different and dynamic decision variables, and built-in optimisation algorithms to determine the best strategy to adopt.  “The challenge for Michelin was to elaborate an optimal capacity investment plan in a situation of volatile demand composed of a high diversity of products. Our AI-Simulation Technology, with its capacity to holistically model and simulate the most complex systems, empowered Michelin to understand the impact of their decisions, test alternative sourcing strategies before implementing them,” said Michel Morvan of Cosmo Tech.

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