Multilevel Network Design Optimization Case Study
Raise saving potentials while improving the service quality.
The Challenge
The company wants to lower the network costs by changing or downsizing the number and location of warehouses and regional distribution centers.
The Solution
By running multiple network design analyses and comparing costs of different scenarios, the company chose the ideal network structure.
Benefits
Cut in the warehouse and holding expenses, reduction in overall shipping and supply chain costs, improved service level, and increased sustainability.
Supply Chain Apps Case Study: Network Design Optimization
The Challenge
A leading pharmaceuticals company in India is running a business for years by using 2 central warehouses, 4 regional distribution centers, and 15 warehouses. Over the years, their customer base has been grown and changed.
Thus, the company has a significant increase in costs, both transportation and warehousing costs.
Considering multilevel networks, the company wants to evaluate its current structure and try to lower the cost by changing or downsizing a number of locations.
Supply Chain Apps Case Study: Network Design Optimization
The Journey
Supply Chain Apps Case Study: Network Design Optimization
The Solution
First, we run As-Is network design analysis to get a cost base. Then, we searched for potential warehouses and regional distribution centers to adjust their locations if they are further than 200 kilometers.
In Level 1 Optimization, we found the optimal number and locations of warehouses. Afterward, by running Level 2 Optimization, we optimized the number and locations of regional distribution centers. The company will now operate with 2 central warehouses, 2 regional distribution centers, and 4 warehouses.
Finally, comparing the cost of As-Is situation with two levels of optimization implemented, we realized cost savings of 25.5%.
Supply Chain Apps Case Study: Network Design Optimization
Benefits
✔️ Cut in the warehouse and holding expenses.
✔️ Reduction in overall shipping and supply chain costs.
✔️ Increased service level.
✔️ Increased sustainability.
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