News
ORTEC helps Primagaz Belgium to optimize its distribution network and drive down costs
November 17, 2009
By enlisting the consulting services of ORTEC for a distribution network redesign project, Primagaz Belgium has a clear view of the most cost effective way to optimize its network. As Mr. van Holsbeke, Sales and Marketing Manager – Cylinders explains, "Our current network is outsourced to six independent bottle centers, according to region. The centers receive the cylinder orders directly from our customers and they also manage the stock, distribution and administration on our behalf. Our main challenge is how to streamline the distribution in order to cut costs and retain more control over stock levels and customer deliveries - essentially making a decision to either bring the distribution in-house or redesign the network along the same lines as the current model."
The benefits highlighted by the project would bring cost savings in the region of 100,000 Euros, dependent on the redesign solution implemented. Additional cost savings could be realized by improvements in cylinder stock management and optimizing distribution channels, thereby reducing transportation costs. Centralizing administration processes would also bring about a reduction in bottle center charges. Furthermore, Primagaz would benefit from increased control of distribution operations and better visibility of customer requirements. As Mr. van Holsbeke describes, "The greatest future benefit to Primagaz will be the ability to control all aspects of our operations."
Simulating the most cost effective redesign scenarios
Describing the outcome of the project, ORTEC Project Manager, Jan Maenhout explains, "Our in-depth analysis enabled us to simulate several alternative business models and to select the most cost effective for Primagaz. The projections allowed us to assess how the new models would influence cost structures, reallocate customers to new bottle centers and reduce the truck fleet, amongst other benefits. Ultimately, it is really important to demonstrate to the client, the types of KPIs that ORTEC's redesign projects can help to improve."
Confirming the redesign assumptions
At the end of the 5-week project, ORTEC delivered their redesign simulations to the General Management of Primagaz and as Mr. van Holsbeke states, "We were all very pleased with the alternatives presented to us. Currently, our distribution network is not efficient because it consists of a large number of low quantity deliveries over a network of many kilometers. Prior to contacting ORTEC, we were already of the opinion that our network redesign should focus on changing the bottle center distribution. It was really satisfying to see our assumptions confirmed in the results, in addition to a number of options not yet considered."
Selecting the right partner
Describing the initial selection process, Mr. van Holsbeke says, “Tasked with completing our distribution network redesign by early 2010, I searched for a company with the right credentials to assist us. As ORTEC are already familiar to our company, I requested an initial meeting and was impressed by the consultants’ industry expertise and their ability to grasp the context and challenges of Primagaz’ requirements. The working relationship with ORTEC was really dynamic”
In addition to consultancy expertise, ORTEC has developed an advanced strategic planning tool, BOSS, which is able to design and evaluate varying logistics networks whilst focusing on cost minimization.
About Primagaz
Primagaz Belgium is part of SHV Gas, who own numerous Liquefied Petroleum Gas (LPG) companies in 23 countries across 4 continents and is the largest player in the global LPG distribution market. Primagaz Belgium’s activities are spread into 3 businesses: Small and Large Bulk Propane, Cylinders & Autogas. More than 40 trucks are equipped to deliver our products to our customers from many kinds of industries: domestic, industrial, construction, agriculture, horeca, leisure and automotive. We use 1500 dealers, have 6 independent bottle centers and employ approximately 75 staff to take care of our customers.