Case Study

Cardiff University     Back to universities

Business innovation: Developing a demand-driven inventory forecasting model to facilitate inventory reductions

  • Cardiff Business School partnered with Panalpina World Transport Ltd to develop an innovative business model.
  • Developing a demand-driven inventory forecasting model to facilitate inventory reductions.
  • Enabling Panalpina to cost-effectively manage customer inventories.
  • Project is co-funded by Engineering and Physical Sciences Research Council and Innovate UK.

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

The project is co-funded by Engineering and Physical Sciences Research Council and Innovate UK. Part funded by a Knowledge Transfer Partnership (KTP) grant, Professor Aris Syntetos, Professor of Operational Research and Operations Management, Cardiff Business School, partnered with the company to develop and implement an innovative business model, supported by a strong quantitative tool. 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 has produced some very exciting results. We have taken real inventory data from Panalpina and developed a very effective algorithm based on leading-edge mathematical thinking. As a result, we now have a new application that allows us to forecast the demand of a company’s products and plan their inventories accordingly.’ Nicole Ayiomamitou, Panalpina.

The KTP developed a new inventory forecasting application ‘Demand Driven Inventory Dispositioning’, a novel exercise in the industry which has transformed the way the third party logistics (3PL) business is conducted. This has helped Panalpina to analyse their customers’ supply chain and identify opportunities to reduce inventory, free up cash and improve service levels. With this tool, 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, is about to commence which will focus on new manufacturing technologies and their impact on inventory management (such as 3D printed inventories). The company has also sponsored a seminar room at Cardiff Business School’s Postgraduate Teaching Centre and supported student placements and excellence awards.