A Thing of Beauty: How Belcorp Mastered Its Supply Chain Complexity with Advanced Multi-echelon Inventory Optimization and Planning Digital Solution

At ToolsGroup, we provide cutting-edge AI and machine learning solutions to enhance supply chain resiliency and efficiency. In this article, I’ll discuss a case study which involved our customer Belcorp, a Latin American direct-sales beauty corporation. This article will examine the challenges Belcorp faced with managing its extensive product range and complex supply chain and how our solution set, which includes Service Optimizer 99+ (SO99+), Demand Planning, and the Multi-Echelon Inventory Optimization (MEIO) model, transformed their operations.

Belcorp: A Supply Chain with Countless Moving Parts

Belcorp is a beauty corporation with a mission to provide beauty products that answer to a variety of individuals’ needs. With presence in 14 countries, Belcorp offers more than 2,000 SKUs across three commercial brands: L’BEL, with advanced skincare for women aged 30 and older; ésika, with confidence-boosting products for women aged 25 to 45; and Cyzone, with trendy, affordable cosmetics for Generation Z. The company has a network of over 900,000 beauty consultants across Latin America and the Caribbean, providing entrepreneurial opportunities while delivering top skincare and cosmetic products directly to the customer.

Complexity Brings Multiple Challenges

Belcorp’s supply chain complexity is staggering, with frequent product introductions and 18 marketing campaigns per year across its nearly one million sales agents. Belcorp’s demand planning and inventory management were challenged in many ways. The company operates with about 200 suppliers globally, four production sites, and 12 distribution centers, requiring precise coordination and flexibility to meet market demands and maintain high service levels. Traditional inventory management methods were not delivering, resulting in overstocks, stockouts, and inefficiencies across the board.

Germán Ricardo Rodríguez Parra, Belcorp’s Operations Strategic Planning Senior Manager, called the cosmetic industry’s supply chain task “a world of complexity,” and pointed out that “without planning well, you can end up with a lot of unused inventory.”

Belcorp therefore turned to us for a comprehensive supply chain optimization solution. Our suite of tools, including SO99+, Demand Planning, and the MEIO model, promised to address their needs and provided transformative results. It played out as follows.

Optimizing Inventory Levels

Belcorp needed a way to optimize inventory levels, ensuring the right products were available at the right time while minimizing costs. Our SO99+ is a sophisticated supply chain planning solution leveraging advanced probabilistic and optimization algorithms. This tool helped Belcorp to map logistics parameters, such as supplier, production and transportation lead time, minimum order quantities and distribution requirements, while achieving desired service levels efficiently.

Demand Assessing

Effective demand assessment is crucial for Belcorp, given their frequent product launches and dynamic market conditions of its direct sales channel. Our demand planning solution provided Belcorp with a centralized and advanced engine to evaluate each of the +30k SKU-site combinations, determining the appropriate probabilistic distribution to be use in the multi-echelon inventory optimization module. This process is essential, as it forms the foundation for defining the optimal inventory level to achieve the highest service level. As a result, the solution helped minimize stockouts, reduce costs, and streamline operations. Planners gained insights into inventory levels and service levels, allowing them to make data-driven decisions and maintain optimal safety stocks.

Mastering Inventory Levels for Materials and Components

One of the challenges facing any manufacturer is assessing the appropriate inventory levels for materials, components, subassemblies and finished goods, then tailoring them to each distribution center’s needs. Here’s where our MEIO model within SO99+ came into play. It automatically calculates optimal stock values at each supply chain node, ensuring multi-level networks meet service goals with minimal inventory investment. The MEIO model enabled Belcorp to maintain a fill rate exceeding 95 percent while aiming to reduce total inventory value by 10 to 15 percent.

Solving Key Problems

Each of these tools addressed specific challenges within Belcorp’s supply chain. However, the primary goal centers on adopting the concept of inventory planning excellence, which involves achieving the highest service at the lowest costs and workload, with the right data, model, process, and culture​ SO99+ suite acts as an enabler of this vision by providing technology aligned with these objectives. As Rodriguez said, “…it’s not about working harder, it’s about working smarter”. There are 4 key pillars to make this possible: define the service level strategy, implement an advanced MEIO model, automate the process and adopt an alert-driven (manage-by-exception) planning process. This method allows planners to respond promptly to emergencies reducing overstock and minimizing stockouts.

As Rodriguez noted, the company can now plan and avoid a Whack-a-Mole approach to problem as they can access “more powerful insights to make data-driven decisions regarding the trade-off between service levels and inventory investments.”

The implementation of ToolsGroup’s solutions led to significant improvements in Belcorp’s supply chain performance. The company’s aim is to reduce total inventory value by 10 to 15 percent, optimizing stock levels without compromising service levels, as they were consistently maintained with a fill rate over the target of 95 percent before the implementation. Centralized demand assessing and automated processes reduced the manual workload, allowing planners to focus on strategic decisions, which improved operational efficiency. Additionally, Belcorp achieved overall cost savings by reducing airfreight costs and balancing inventory across distribution centers, leading to overall cost efficiencies.

What the Future Holds

Belcorp’s phased implementation of SO99+ began in mid-2023, focusing on a subset of products to monitor performance and ensure alignment with other KPIs. The balancing of inventory levels across their network was projected to complete in H1 2024. Soon, Belcorp plans to implement ToolsGroup’s lot size optimization module with price break constraints, which will further enhance their supply chain strategy.

A Supply Chain Reinvented

Belcorp’s journey with ToolsGroup demonstrates the power of advanced AI and ML solutions in transforming complex supply chains. By leveraging our SO99+, Demand Planning, and MEIO models, Belcorp was able to achieve significant improvements in inventory optimization, service levels, and operational efficiency. As the company continues to define their digital supply chain roadmap, we remain committed to supporting their growth and success. Together, we are not only contributing to create products that make people look and feel good, but we’re also helping Belcorp make their efficient and resilient supply chain a force for good.

About the Author

A globally recognized expert on supply chain, Inna Kuznetsova is CEO of ToolsGroup, a supply chain planning and optimization firm. She can be reached at ikuznetsova@toolsgroup.com.