Digital double from Korus Consulting contributed to the optimization of Danone's supply chain in Russia

2021: Cost Optimization

On March 25, 2021, Korus Consulting Group of Companies announced that together with Danone in Russia they modeled the possibility of optimizing raw material costs by redistributing production between sites and transferring part of the equipment. Thanks to digital twins, the company determined where and in what volumes it is more profitable to manufacture products, and tested the hypothesis of the need to open a workshop for the production of milk powder.

Danone is one of the largest enterprises that supplies dairy products, children's and specialized nutrition the Russian to regions and countries. The CIS company as of March 2021 has more than 10 sites, each of which has its own set of production lines. Danone was looking for options to minimize production costs and. logistics It was necessary to redistribute the load at the sites and determine possible ways of their development to optimize the costs of purchasing and delivering raw materials and finished products. In addition, the company wanted to assess the potential to reduce logistics costs within the existing infrastructure. To solve these problems and build an effective supply chains one, Danone invited KORUS, with Consulting which it already had experience in cooperation.

Consultants at the IT company have developed a digital twin of Danone's supply chain: from farms and factories to end-users. With the help of optimization, KORUS Consulting determined the levers of reducing total production and logistics costs and conducted a scenario analysis taking into account all possible options for cooperation with retail. As a result, experts have developed recommendations: what volumes of products should be produced at specific sites, what infrastructure facilities should be closed, and how the decisions received will affect the structure of supply chains by period.

The use of digital twin technology allowed Danone to find effective ways to reduce operating costs in deliveries: potentially a reduction of up to 3%. The mathematical solution confirmed the effectiveness of reducing the number of distribution centers and consolidating supply volumes, which allows the manufacturer to reduce warehouse costs. Moreover, minimizing mileage on the last shoulder allows you to reduce costs for transport, "comments Valeria Tursunova, consulting director of Supply Chain Design, KORUS Consulting Group.

Supply chain modeling helps us make informed decisions about product production depending on the purchase prices in the dairy market, existing capacities and operating costs. Using mathematical algorithms, we identified the most effective sites in terms of raw materials costs and estimated possible scenarios for their development. In addition, we tested the hypothesis about the need to open an additional workshop for the production of milk powder, "emphasizes Alexander Lieberman, head of planning for the utilization of Danone production facilities.