Demand-driven inventory forecasting

Panalpina World Transport Ltd is one of the world’s leading providers of supply chain solutions. The company combines air freight, ocean freight and logistics to deliver tailor-made end-to-end solutions. The company sought a ‘hidden formula’ solution for lean inventories to enable them to buy and manage customer inventories and offer a unique logistics service to customers.

Part funded by a KTP grant, Professor Aris Syntetos, Professor of Operational Research and Operations Management, Cardiff Business School, partnered Panalpina to develop (and implement) an innovative business model. This solution would:

• develop a demand-driven inventory-forecasting tool to facilitate inventory reductions at customer businesses
• develop a commercial model, enabling Panalpina to cost-effectively manage customer inventories.

The partnership recruited a KTP Associate, Nicole Ayiomamitou, to manage the project and transfer the academic knowledge and expertise into the company.

“The partnership produced exciting results. We took real inventory data from Panalpina and developed a new application that allows us to forecast the demand for a company’s products and plan their inventories accordingly.” Nicole Ayiomamitou, Panalpina

“We built a very strong relationship with Panalpina. It brings benefits not just in terms of sponsorship and funding, but by providing ‘real life’ case studies for use in our postgraduate courses and offering our researchers a taste of impactful research.” Professor Martin Kitchener, Dean of Cardiff Business School.

The KTP developed a new inventory forecasting application ‘Demand Driven Inventory Dispositioning’ (D2ID). It helped Panalpina analyse customers’ supply chain and identify opportunities to reduce inventory, free up cash and improve service levels. In short, Panalpina has become the first global logistics company in the world to actively manage customers’ inventory.

Graded ‘outstanding’ by Innovate UK, the KTP has supported the University’s longer term strategic partnership with Panalpina. A second project, a multi-Associate KTP, will focus on new manufacturing technologies and their impact on inventory management (such as 3D printed inventories). The company also sponsored a seminar room at Cardiff Business School’s Postgraduate Teaching Centre and supported student placements and excellence awards.

Further collaboration continues, Panalpina has partnered with the University to launch a Logistics Research Centre at Cardiff Business School. Part funded by Panalpina and attracting £500k from Engineering and Physical Sciences Research Council (EPSRC), the Centre will conduct leading research into the fields of distributed manufacturing, 3D printing, the circular economy and the impact of digital manufacturing on global supply chains.

Mike Wilson, global head of Logistics at Panalpina, added: “We have been able to jointly identify future manufacturing and supply chain trends, and build our business in anticipation of this changing environment. Looking ahead, the insight provided by the research centre will allow Panalpina to better design our customers’ manufacturing and supply chain strategies with new technologies and macroeconomic forecasts in mind.”