Parts distribution giant LKQ Europe has introduced a new software system in a bid to increase supply chain efficiency.
The custom AI software has been developed by 09 Solutions and Supply Chain Insights with the goal of using data gained from outside of the company, often known as ‘from the outside looking in’, with a view to improve the company’s demand and supply sensing capabilities and create a more agile and profitable supply chain.
READ: LKQ Europe piloting outside-in logistics project
LKQ also hopes the new systems will reduce the ‘bullwhip’ effect, a phenomenon known in supply chain circles when a small number of customers asks about a specific product or part, and the supplier responds by vastly over ordering said product, much like the wave of a bullwhip. Using o9’s predictive analytics and external market signals, LKQ Europe reduced the bullwhip effect on its business from 48% to 37%.
A pilot project, known as ‘Zebra’ has been held across the firm’s Stahlgruber business in Germany and yielded a result that exceeded expectations. The ‘Forecast Value Added’ (which, simply put, involves finding steps that work and removing those that don’t) improved by 17.3% – giving LKQ Europe insight into market signals.
“For some time, I had been convinced of the power that outside-in planning could have on our supply chain,” said Nicole Miara, Digital Transformation Lead, LKQ Europe. “Our participation in Project Zebra was quite the eye-opening journey. This wasn’t a software or IT project but rather a business implementation project that came with a fantastically diverse group of data scientists, business leaders, and supply chain professionals who are part of the Project Zebra think tank community. The outcome of the pilot has led us to rethink the orchestration levers that can be pulled in the future to make better supply chain decisions based on market, supplier, and channel data.”.
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