Optimisation saves Caterpillar Inc. over $1,12bn across the global supply chain
The need
A world-leading manufacturer with a highly complex transportation network, wanted to improve its demand strategy forecasting, due to significant increases in available data, in order to speed up its decision-making processes. The company’s engineers were finding limitations with commercial software, which could only deliver partial solutions.
As a result, they ran a competition for universities and in-house research teams to develop new technology, with the aim of optimising Caterpillar’s supply chain. Brunel entered the competition and were successful in being selected to develop the technology, securing funding from Caterpillar to conduct extensive research and provide solutions.
The solution
Working collaboratively with the organisation, we investigated fourteen different models, progressing two that performed well. Using and adapting these algorithms, the university developed solutions to provide optimal cost and efficiency savings in the supply chain. Data included many aspects of transportation such as which ports, how many ocean lanes, size of materials and containers required, and also factory production and assembly line processes. Brunel ran complex analyses, which also factored in resilience for situations beyond Caterpillar’s control e.g. weather.
The outcome
- Bespoke artificial intelligence software to effectively manage data in a highly dynamic environment
- Significant cost savings and minimised losses across the global supply chain of an estimated $1,12bn
- Improved managers’ visibility and understanding of their networks, allowing for more informed decisionmaking and substantial reductions in the time taken to make global supply chain decisions, to within 24 hours
- A significant reduction in transportation costs and transport time, contributing to the reduction of the company’s overall environmental footprint since 2016
Research led by Professor Kalganova Ant Colony Optimisation (ACO) has been fully embedded in their GEMSTONE network modelling and optimisation solution in November 2016 and has been used to design the logistics to manage supply chains for every Caterpillar product and component globally since then.
This involves over 3 million individual products and approximately 700,000 service parts globally. In the UK alone, GEMSTONE supports more than 7,000 employees and 30 production facilities that distribute products worldwide. Her research has enabled GEMSTONE to constantly optimise their entire supply chain as well as their operations in near real time (every 32 minutes).
Watch Tony Grichnik, Global Technology Leader at Caterpillar, give a talk about the collaboration:
View on YouTube https://www.youtube.com/watch?v=SLNUrGFkibg
Partnering with confidence
Organisations interested in our research can partner with us with confidence backed by an external and independent benchmark: The Knowledge Exchange Framework. Read more.
Case study last modified 26/10/2022