NIBCO Uses Simulation to Reduce Supply Chain Inventory Costs

Case study

NIBCO, a leading manufacturer of flow-control products such as fittings and valves, utilized SIMUL8 simulation software to test a new supply chain distribution strategy - reducing inventory by 40% and cutting systems costs by 12%.

Simulation gives NIBCO the confidence to act


NIBCO, a leader of flow control solutions, has a manufacturing history that spans more than 110 years. Looking to implement a new supply chain distribution strategy, NIBCO needed to assess whether this was the right approach.

Mike Seifert, a plant manager with NIBCO, found SIMUL8 to be a valuable tool for testing his strategy and communicating the effects of changes to his colleagues.

With SIMUL8 Seifert and his team created a simplified model of Nibco's supply chain with a single product line. They tested how holding inventory and releasing it at different points in the supply chain affected distribution.

After plugging in historical customer service and inventory data, they could see which changes served the customer best and how they affected inventory percentages.

The simulation also helped them sell their strategy to the CEO and chairman. Rather than just telling board members about actual or proposed changes, Seifert could show them. "Our stakeholders can see the product moving through the simulation and the reduction in lead time, and it holds their attention much longer," he explains. "Instead of showing a bunch of static numbers, you're seeing something live within the presentation."

"Our stakeholders can see the product moving through the simulation and the reduction in lead time, and it holds their attention much longer.

Instead of showing a bunch of static numbers, you're seeing something live within the presentation."

Mike Seifert, Nibco

The result


When the new strategy went live, actual inventory numbers ended up within 1 percent of the prediction and Nibco was able to decrease inventory by around 40 percent and cut total systems costs by 12 percent.

"We came up with the strategy," says Seifert, "but the simulation gave us the confidence to move ahead."

He maintains that being able to fine-tune the project through simulation allowed Nibco to implement its strategy sooner and with fewer problems. Seifert likens this use of simulation to buying additional insurance.


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