Sika chooses Lagrange.ai for supply chain network design

Chemical company Sika has 400 plants worldwide, achieves solid sales growth and is constantly acquiring companies. Supply chain footprint decisions are the order of the day, but the company recently realized it lacked an effective network design tool. Decisions were driven more by gut feeling than by data. Head of Operations Stephan Oderbolz explains how he is changing this step by step, and why the collaboration with start-up Lagrange.ai is working out so well.

“To understand how we were making supply chain network decisions, you need to know a bit about the structure and culture of our company,” says Oderbolz, based out of Sika’s headquarters in Switzerland. The chemical group is organized decentrally based on a matrix structure, with country managers ultimately responsible for what happens in their countries. Oderbolz’s organization runs horizontally through this, ensuring coordination between countries and overseeing efficient operations.

“We operate in more than 100 countries and have production sites and warehouse facilities around the world. Country organizations have a general manager who has the autonomy to add factories or warehouses, but they always do so in consultation with us. Sika’s internal culture is focused on cooperation.”

As the company grew and more competing businesses were acquired, this decentralized way of making network decisions began to falter. “We acted a lot on gut feeling, and did not always look at the long-term consequences,” says Oderbolz. “If a plant was nearing its maximum capacity utilization, it was often automatically decided to expand capacity. The investments required for this fell under the budget of the relevant country manager, so they had a lot of freedom in this.

From my department, there was a call to look further into the future when making these kinds of decisions, and to think carefully about whether location choices for production or warehousing within the total supply chain were still optimal in the long term.” … … …

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