Chesapeake is a leading paperboard and plastic packaging supplier. The UK headquartered business has over 40 operations in North America, Europe, Africa and Asia, with customers in a wide array of industry sectors.
The Challenge
Chesapeake's suppliers deliver on a cycle of up to three months, while its customers demand their products within 10 days. This meant the company needed to source materials quickly with lowest site input cost and working capital.
To complicate matters further, Chesapeake's 18 paperboard product manufacturing sites are not only spread across the globe, but all have different procurement requirements. This makes Chesapeake's supply chain a complex web made up of diverse and overlapping threads.
Despite the obvious savings that should have been made through its buying power and ability to source raw materials globally, the company's disjointed procurement structure was causing excessive stockholding across the group.
This further led to unnecessary waste, inconsistent pricing and erratic lead times. Recognising this paradox, Chesapeake's purchasing team called in the company's supply chain business division, Daylight Supply Chain Services, to rationalise the system.
The Solution
As with all projects, Daylight's first task was to carry out a comprehensive assessment of the existing technology, processes and personnel being used for supply chain management. It soon became clear that creating a centralised procurement department would eliminate duplication and make the most of the organisation's economy of scale.
To empower the relatively small team now charged with effectively managing the supply needs of multiple sites, Daylight built a bespoke, Internet based tool. This integrated perfectly with Chesapeake's existing sourcing and stock systems, and analysed the complex and diverse data they provided in real time.
As well as the appropriate software installations, Daylight also provided full technical and cultural training on its use to make sure staff knew how to make the most of the new system's capabilities. Chesapeake is now able to manage around 42 million in spend and supply 60,000 tonnes of material across 400 supply lines with just 3 people. All of this was achieved in less than 16 weeks.
The Results
The Daylight system monitors and analyses behaviour patterns and anomalies within the supply chain and subsequently recommends actions that will reduce undesirable stock shortages or overstocking.
Through the system, the Chesapeake supply chain managers are able to source materials from their most cost effective supplier in the world at any given time, and make sure that the material arrives at the correct site 24 hours rather than 24 days after order.
This just-in-time capability has given Chesapeake the capability to reduce the time raw materials have to be stored in the vast majority of its warehouses from 60 days to just 3, and has reduced customer turnaround from 15 to 5 days.
These improvements have saved Chesapeake 1 million in the initial 12 month period. The business also benefits from a lower average input cost to the business, and this year will see further improvements in working capital. Daylight provides the platform to make sourcing changes as the market moves to the best value suppliers across the globe.
"Using Daylight has changed the way we do business for the better. Our cost savings speak for themselves," commented Niall Walker, Chesapeake Supply Chain Planning Manager.
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