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Problem Statement |
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Client:Second to market leader in Indonesia
To determine how many warehouses are required and where these should be located to minimize total cost of operations and meet the desired service level. |
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Approach |
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- Mapping of existing distribution system, warehouse model & service level expectations
- Capturing information regarding potential warehouse locations, different modes of distribution, transportation cost, manufacturing cost, warehousing fixed and variable cost, production constraints, transportation constraints etc.
- Building mathematical model for network design
- Scenario analysis was done in order to answer specific client questions
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Recommendations/Solution |
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- To minimize ‘cost-to-serve’, the company should have 6 HUB Warehouses i.e. reduction of warehouses from 13 to 6.
- HUB Warehouses are supplied by 40/48 T trucks i.e. goods travel long distance by bigger truck size reducing the cost/T/km.
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The immediate benefits included saving of USD 3.75 Mn p.a. |
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