Delivering warmth with an optimized network

Like many homes around the world, homes in Belgium often depend on propane gas for cooking and heating. Primagaz is the country’s leading supplier. With a network of more than 1,200 sales points, Primagaz is never far away from the Belgian consumer. Thousands of customers rely on the safe delivery of Primagaz in bulk and in cylinders. To sustain its position as a market leader, the company was looking to optimize its supply chain network. Their key priorities were to cut costs and gain more control over stock levels and customer deliveries.

A costly distribution puzzle

Primagaz’ distribution network performed a large number of low quantity deliveries over wide distances. This proved to be costly and inefficient, so the company’s team considered changing the placement of its distribution centers as a possible solution. They asked ORTEC to test their assumption and provide possible alternatives.

Our team embarked on an analytics project consisting of several phases. First, we collected 12 months of historical data, such as customer deliveries per cylinder type, delivery dates and distribution centers. Subsequently, we visualized the different aspects of the business, as well as its logistics flows. Finally, we simulated the impact of alternative business models on the network and selected the best alternatives based on detailed calculations. These calculations were performed in ORTEC Supply Chain Design, an application that allowed us to map logistics activities compared to actual costs.

New possibilities with analytics

"Our network was outsourced to six independent cylinder centers, per region. The centers received cylinder orders directly from our customers and they also managed the stock, distribution and administration on our behalf. Our main challenge was to streamline the distribution in order to cut costs and retain more control over stock levels and customer deliveries - essentially we had to make a decision to either bring the distribution in-house or redesign the network along the same lines as the current model." - Michel van Holsbeke, Primagaz’ Sales and Marketing Manager - Cylinders

With ORTEC’s analytics expertise, Primagaz was able to intelligently simulate the redesign and optimization of the company’s distribution channels. Primagaz also started using an advanced strategic planning tool, ORTEC Supply Chain Design, to design and evaluate varying logistics networks while focusing on cost minimization. Projections performed in the tool allowed Primagaz to assess how new models would influence cost structures, how to re-allocate customers to new distribution centers, and the degree to which their fleet could be reduced - among other benefits.

“The project was completed in just a few weeks and the results, while confirming our own redesign assumptions, brought forth a number of possibilities we had not previously thought about,” Michel van Holsbeke adds. “I 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. The greatest benefit to Primagaz will be the ability to control all aspects of our operations in the future.”

Lower costs and an even stronger market presence

Following the network redesign, Primagaz Belgium projected 100,000 euros in savings as well as cost benefits from more centralized administration. The company managed to save costs by reducing investments in new cylinders. Increased control over distribution operations resulted in less transport costs as well.

Better visibility into customer requirements and improvements in cylinder stock management resulted in customer service gains, helping Primagaz further secure its foothold in the Belgian market.