Distribution Network Design is rapidly gaining recognition as a key driver of supply chain success. Satisfying overall customer demand at low costs and required service levels requires specialized logistical planning, optimization and management expertise.
What is distribution network design?
A well-planned distribution network can reduce operating and capital costs while increasing flexibility, scalability and enhancing on-demand responsiveness to shifts in business needs or growth opportunities. It is a significant challenge, though, to identify and implement the best solution from an endless array of possibilities. Moreover, making a change to the network without understanding the full impact could cost more than is expected or even decrease customer service levels.
The first step is to develop an “Optimized Baseline” scenario that illustrates your current network’s capacity constraints and identifies opportunities for improvement. This includes determining the amount of space and resources currently dedicated to inventory storage, the number of locations providing customer service, and the frequency and size of deliveries. Then, a Distribution Network Design Consultants analysis is performed to evaluate the benefits of various alternatives. This includes performing a return on investment analysis of all options and conducting a sensitivity (or tipping point) analysis to identify critical variables that affect cost and savings.
It is essential to understand that optimization models are complex and highly dependent on the data, assumptions and parameters used to run them. Therefore, it is vital to obtain expert help in gathering and analyzing the needed data and using the right modeling toolset to accurately evaluate alternatives.