Supply Chain, Logistics and Distribution Network Design Modelling

Did your Distribution Network just evolve over time in an unplanned fashion?

Are your inventory stocking locations not in the ideal place to best serve your customers?

Then I’m afraid your Distribution Network is most likely not aligned properly with your market share and customer base.

As a result, you’re not providing the best service at the lowest possible cost.

Ask Yourself:

1. Do you have the most appropriate distribution network for your products and customers?
2. Is it configured to provide the best service at the lowest cost?
3. If not? Why not?

Why do you need to model your Supply Chain, Logistics or Distribution Network Design?

The business requirements of a network will change over time. This can be due to mergers and acquisitions, entering new markets, expanding product ranges or indeed changes to the regulatory environment.

Logistics VietShip’s consultants have conducted 100’s of network studies for a vast range of customers, across a variety of industries and in many countries.

This experience shows us that for companies that have never undertaken such a study or that have undergone or plan to undergo significant change in their Supply Chain, there is a high degree of risk that:

1. Network costs could be 10-15% higher than expected norms.
2. Service lead times may be adversely impacted.
3. Excessive product damage could be occuring.
4. Inventory investment is abnormally high.
5. Product availability is a major issue.

Read on to learn more about our approach and see some articles on the topic, or if you would like help in understanding the topic, or just someone to bounce some ideas off, feel free to contact some of our key staff directly, whose details are shown below.

Network Modeling Approach

Our distribution strategy consultants can determine the optimal Supply Chain or Distribution network to satisfy customer demand at specified service levels and at the lowest cost. Specialist Supply Chain network modeling software is used to allow cost and service optimisation of the network to be established. Networks can be modeled from factory to the consumer, taking into account all the key cost and service drivers such as:

1. Customer location
2. Order size and frequency
3. Transport costs
4. Transport vehicle types
5. Transport modes
6. Warehouse (Distribution Centre) size, location, resources, costs…
7. Service level requirements
8. Factory and supplier locations
9. Ports of entry for imported products
10. and many more key variables

We have also developed a fast track network test, that uses market based warehouse and transport costs, read more below.

These types of projects are normally carried out as a result of significant business growth, acquisition, or a need to reduce supply chain complexity and costs.

A recent internal review of our work in this area over the last 12 years (100+ projects), indicated that businesses undertaking these projects saved between 4% and 14% of distribution costs.

We have undertaken these projects across a range of Geographies, from Global, SE Asia Regional, Indonesia, Australia, New Zealand, Thailand, and many others.

Of our 30 professional staff, we currently have 9 who are trained and skilled in this type of supply chain modeling project work.

Distribution networks, or indeed whole Supply Chains can easily be modeled.

Features and Benefits include:

• Reduced distribution costs
• Improved understanding of customer service needs and options
• Improved understanding of service costs
• Appropriate balance of storage, inventory and transport costs
• Graphical mapping of customer demand and density
• Access to leading distribution network modeling tools and methods
• Also, this type of work is often linked with customer profitability analysis, product profitability analysis and Cost To Serve (CTS) audits

You can see some of the simple but useful graphic outputs at Mapping Products

Behind these graphic outputs lies a comprehensive cost, resource and demand database and optimisation engines, that provide a rigorous cost/benefit analysis.

We have used these models as part of major consultancy projects in industries such as retail, beverages, FMCG, building products, pharma, automotive and many others.

But of course, having the right software tool is only part of the mix!

Test Your Network

Logistics VietShip’s consultants have developed a ‘fast track’ network modeling approach for those companies that merely want to quickly test a range of distribution network options at a high level, or do not have the ability to gather detailed cost data on their own networks at this time.

Based on 100+ similar network studies, our specialist consultants are able to apply market based costs for your warehousing and transport operations. You only need to supply customer locations and demand data to allow a range of network options to be quickly modeled. This approach:

1. Provides a range of high level network options for comparative decision making.
2. Provides models in a fraction of the time and cost of more detailed approaches.

For a more detailed network modeling approach, where greater accuracy is required, we suggest taking the full network modeling approach above.