Valvoline’s road to a more proactive supply chain – and stronger customer relationships

Date Posted: March 04, 2021

To keep vehicles running worldwide, Valvoline needs to get its motor oils, additives and lubricants to end users in every corner of the globe. In North America, they operate two distinct supply chains for that: one to retailers (such as Walmart, O’ Reilly Auto Parts and AutoZone) and another to installers (including Valvoline Instant Oil Change centers and other oil-change shops).

A recent webinar featured Valvoline Senior Director of Supply Chain Eric Rossi and Logan Ensign, VP Client Solutions at Alloy. Listeners learned how data has transformed supply chain into a strategic advantage for Valvoline. They explored how connecting the dots from manufacturing all the way to downstream stores can make a difference in service levels, conversations with customers and company growth.

Read below for some highlights. Intrigued by these tidbits? Be sure to listen to the entire 45-minute webinar What worked for Valvoline: Turning a complex multi-tier supply chain into a well-oiled machine.

Valvoline's NA Supply Chain - Old School
Valvoline’s original view (shown in green) lacked downstream visibility and focused on performance to distribution sites
Before Alloy: Partial visibility hampered growth 

A couple of years ago, before working with Alloy, Valvoline’s supply chain visibility (and priority) was limited to its own manufacturing and warehousing facilities, says Eric. “For many years, if we were servicing retail and installer distribution sites, we felt we were in pretty good shape.” But, he admits now, they actually weren’t.

Lacking the downstream perspective, down to what’s going out of shops, he says, was a “very simplistic point of view that actually hurt us quite a bit.” Customers were demanding more of them, and meeting their expectations would require taking more ownership of their supply chain. 

Valvoline's NA Supply Chain - Modern
Valvoline's view (shown in green) reaches downstream with Alloy

“Moving forward, it became more and more important for us to understand that downstream stuff we didn’t have access to,” he says. For retailers and installers both, that would mean access to distributor and store inventory and consumption data, in a digestible format that they could use to guide decision-making without further data manipulation.

To the delight of Eric and his teammates, Alloy made it easy, with automatic data connections, an expert team and minimal IT involvement required.

Becoming more proactive

Having clear downstream visibility frees Eric and his team from constantly reacting to emergencies. Retailer POS (sell-through), retailer DC inventory and retailer orders coming to the Valvoline DCs inform a dashboard Eric can pull up “to get an overall understanding of what things look like.” It’s so important to him that he starts every day with a quick look:

I now have visibility to three layers of the supply chain instantaneously, coming in every morning. I can be very, very proactive and prepared further up my supply chain.
-Eric Rossi, Valvoline Sr. Director of Supply Chain

For example, a look at this Alloy dashboard showed Eric smooth curves representing major customers’ inventory and sell-through, but customer orders appeared in a jagged up-and-down pattern. The intuitive visualization facilitates a discussion with those customers on how to smooth ordering patterns, so Valvoline can better forecast what customers are going to need and be prepared to meet those orders.

Sawtooth ordering patterns on the left contrasted with smooth sales and inventory curves, informing discussions with retailers

Even with the data, getting a single view of his business like this wasn’t possible before. 

As we started to get that data, we needed a place to digest and translate it, to be able to use it further up in our supply chain. So we could start to take advantage weeks ahead of time, before that POS data made its way through the supply chain. Alloy has helped us do that.

Before Alloy, Valvoline couldn’t see changes in consumer demand until they were reflected in orders, often weeks later, if at all. That often left them with little they could do to respond, given lead times and plans already set by retailers. Now they can see unexpected changes from plans earlier, when there’s more you can do about it, and fixing the problem is easier, too.

Alloy also helps Valvoline look out at orders in the next 14 days and detect gaps between available inventory and scheduled commitment. Using simulated future inventory levels, Valvoline can prevent an estimated $3-5M of risk per year by preemptively adjusting production and distribution to meet customer needs and avoid OTIF fines.

All this is done through management by exception at the store, DC and product level. A more detailed dashboard, which Eric’s team uses, quickly highlights anomalies humans wouldn’t find (across thousands of products at hundreds of DCs and sold in thousands of stores) so they can address them earlier.

Key takeaway: Connecting the dots through the supply chain informs proactive order and inventory management.

Creating interactive customer conversations

An important part of Valvoline’s business is customer relationships. Eric has found that coming to the table with actionable insights improves those relationships and helps increase value for both parties. 

“Today when we go out and talk to our customers, it’s a very interactive conversation because we have access to this data. We actually try to help them within their own supply chains to get better, more efficient, more cost effective.” For example, they’ve helped a retailer prevent out-of-stocks while reducing overall inventory at the retail DCs. Analyzing sell-through patterns in Alloy, they recommended presentation minimums and reorder points for each store based on replenishment schedules and daily demand.

Conversations backed by data on how a change benefits a retailer, in dollar terms, reinforce trust and get retailers’ attention. He says

We can talk to them about areas where we believe they can save money. In many cases, it’s not being out of product or too low on product. They may have too much product. We can have those conversations because of the data we have in Alloy.

Now, Eric’s team finds that process easy, since they can use Alloy dashboards in discussions with retailers, rather than spending time constructing their own visualizations. For Eric, the added value of those insights elevates them in the eyes of the customer: “Those conversations really add to the relationship and help the relationship tremendously.”

Key takeaway: Data-driven insights empower manufacturers to have interactive conversations with retailers – where retailers actually listen and follow their recommendations. 

Cementing customer relationships

With Alloy, Valvoline can help each partner in their supply chain keep the right amount of inventory and safety stock to ensure they’re efficiently servicing demand. It’s a major benefit for distributors and retailers who don’t have the same visibility or resources to analyze all their own data. When Valvoline helps customers see themselves (and make better decisions as a result), that creates a “customer stickiness” beyond that of supplying a great product and great service.

According to Eric, Alloy

truly allows us to be a strategic weapon to our sales and marketing team. We’re starting to use some of this supply chain capability we’re gaining from Alloy to market to our customers. We say, “Hey, look what we can do for you. Look how we can help you … what metrics we can provide you coming out of Alloy.”

In fact, Valvoline’s use of Alloy now allows them to provide inventory management as a service to their customers, a real value-add that further cements the relationship. It’s so powerful that when customers see how sharing their data can help them and how easy it is, even those that were hesitant about it before are happy to do so.

Key takeaway: Getting and using POS data to help customers lets manufacturers become trusted partners, rather than mere suppliers.


 

Supply chain isn’t the only part of Valvoline that uses Alloy. Alloy helps sales and marketing become more proactive too, and having everyone on the same platform helps them stay aligned and have better internal conversations.

By taking care of the data complexities, Alloy helps Eric and the rest of the Valvoline team focus on the things they’re expert in. According to Eric, “It has truly been a really good partnership for these first couple of years. We see great, great things on the horizon as well….”

Find out more by watching the webinar, including:

  • How Valvoline quickly reacts to inventory needs as promotions are happening
  • Valvoline’s successful approach to setting up data connections
  • Getting data in a digestible form to share with retailers

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