CASE STUDY

Network Optimization Reduces Operating and Holding Costs for a Logistics Company

Sep 23, 2016

Business Challenge:

Optimization of logistics network to reduce costs

A leading logistics client wanted to review its transportation network to reduce cost of operations.

Situation:

High network management costs

The client was facing challenges of increasing transportation costs and high inventory levels of finished goods at each level of transportation network. This also led to high operational and holding costs. Client was looking for a solution to optimize the network to reduce the costs.

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Solution/Approach

Supply chain network model creation with sensitivity analysis and inventory optimization

We examined thoroughly the existing transportation network and inventory level at existing DC locations. We created a supply chain network model and investigated the optimal number and locations. In order to decrease the transportation cost and inventory levels, sensitivity analysis and simulations were performed for new and additional locations.

Impact:

Reduced operational costs

Client gained visibility on the reasons of inefficiencies. This helped them optimize the network with improved fulfilment and service levels, reduce inventory levels at each location with better network planning. The client also reduced the cost of operations by optimizing transportation and reducing inventory holding cost.

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