KORUS Consulting has completed a project to streamline the supply chains of Cherkizovo Group, the largest meat producer in Russia. The project has enabled the Group to review its current product flows and identify the most effective changes that can be made to delivery routes. Going forward, a new IT solution will help the company achieve a reduction in monthly operating costs.
Cherkizovo Group is a producer with extensive manufacturing and logistics infrastructure that delivers its products to the federal retail chains and large fast food chains across Russia, while also exporting them to other CIS countries, the Middle and Far East, and Africa. To optimize the existing supply chains, reduce storage and transport expenses and identify areas for potential growth, Cherkizovo needed an industrial-scale SCD system. They chose a solution based on LLamasoft Supply Chain Guru, and selected KORUS Consulting, a strategic partner of LLamasoft in Russia, as the system implementation expert.
KORUS Consulting created digital twins of the supply chains. Those are mathematical models reflecting the product’s journey from the manufacturing facility to the store shelves and factoring in the associated costs. To achieve this, the team gathered a wide range of data, including information on logistics costs, process recipes, infrastructure facilities and production sites, clients, sales statistics and more. This helped develop key assumptions about Cherkizovo’s supply chains and business processes, including those on production singularities and limitations, freshness requirements (in particular, for the ultra fresh category), customer experience, etc. This tremendous undertaking would have been impossible without the creation of large sophisticated mathematical models.
In addition to the global optimization of all Cherkizovo Group supply chains, the KORUS Consulting team had to deal with more specific tasks: they worked hard to increase the effectiveness of individual routes in certain regions of the country, optimize product sourcing with a focus on customer service patterns and improve overall margins. By following the recommendations drafted on the basis of modelling, Cherkizovo will be able to reduce its monthly storage and transport expenses, while also considerably optimizing the total operating costs. To automate the processing of data used in modelling and analysis, the team integrated the LLamasoft Supply Chain Guru platform with the ETL system of LLamasoft Data Guru. This IT tool helped simplify the processing, conversion and use of information for calculations.
“The complexity of supply chains in meat processing imposes certain limitations on both intra-company processes and associated support tools. For effective business growth, we must carefully weigh our every decision in terms of economics and customer service level. The implementation of the scenario planning tool helped us make more balanced decisions in a shorter period of time and consider their impact on all business segments, while also quickly identifying potential cost reduction and profit improvement opportunities,” said Evgeny Subbotin, Director for Logistics and Supplies at Cherkizovo Group.
“The models that we developed help manage supply chains in an effective manner and quickly test the most challenging business hypotheses in a risk-free environment. The use of digital twins quickly pays off: according to our estimates, the modelling recommendations will help the company reduce its operating costs on a monthly basis. The effective management of supply chains in Cherkizovo will contribute to the logistics and transport savings worth millions of rubles,” commented Dmitry Krasilov, Head of Supply Chain Design at KORUS Consulting.