High-performance Strategic Configuration of the Distribution Network – Effective Organization and Execution of Transportation
The impact of new regulations, the rise in operational costs and the pressure of financial performance lead companies to re-evaluate their distribution methods.
From the supply of raw materials to the delivery of the finished product, organizations’ transportation and distribution networks are more and more being considered an important part of the total logistics cost. The control and optimization of transportation and distribution operations allow companies to remain competitive. Visionary leaders have realized that optimal configuration of their logistics network enables them to remain highly reactive, which guides them in their strategic decision-making process, and assists with identifying problems or responding to customer issues. The configuration of the distribution network, along with the optimization of the transportation process, is indisputably the most important factor influencing the logistics performance of an organization.
All these elements must be integrated and managed skilfully. Good practices require proper balancing and managing tradeoffs. The reduction in costs in one sector of activity can increase costs in another. The reduction in transit times, for example, can lead to the increase of transportation costs and have an impact on customer service if not managed adequately.
The following principles govern the optimization of the distribution and transportation network:
- Strategic Assessment of Distribution Networks: Optimization of manufacturing centre positioning, optimization of distribution centre roles and positioning. Assessment and effect of transportation methods, simulation of distribution networks. Selection of optimal algorithms to reduce operational costs while optimizing the level of customer service.
- Network Inventory Deployment: Analysis of inventory control practices, review of performance and inventory coverage, segmentation and specialization of distribution centres, simulation of service levels. Recommendation to improve responsiveness to customer’s requirements and reduce logistics costs.
- Assessment of Transportation Strategies: Organize transportation (roles and responsibilities), assessment of optimization tools, transportation procedure deployment, transportation capacity optimization, minimizing empty loads. Development of reverse logistics optimization strategies, establishing performance indicators and follow-up of transportation operations.
- Optimization of Private Delivery Fleet: Optimization of delivery routes using simulation software. Selection of optimal algorithms to reduce travelling, costs and working hours while minimizing the number of routes.
- Assessment of Transportation Practices: Analysis of transportation practices (carrier selection, rate, and frequency). Recommendations to improve responsiveness to customers’requirements and reduce transportation costs.