Inventory is a major component of the working capital structure for SLB (formerly Schlumberger), a global technology company that provides energy services to clients. Within this context, optimal positioning of inventory along with the distribution network is critical for smooth operations. As a pilot location, the United States warehouse network was selected to run the project. This project used a model created via a multi-step approach to handle inventory distribution via SKU-segmentation based business rules, combined with mixed integer linear programming for network optimization. The model, once implemented, would result in 1.7 million dollars reduction in inventory requirements and enable the company to move from a disconnected multi-node network to a connected hub-and-spoke model. This will also result in a subsequent reduction in working capital and improve free cash flow. Our recommendation is to implement this model and consider other SLB regions for similar projects.
