Distribution Structure using outbound logistics

Distribution Structures and Outbound Logistics

GSCM – 2015/2016

Swati Singh, Piyush Virmani, Josh Teal, Mateo Prezelus

Group 7

Agenda

• Methodology• Overview of revenues• Overview of costs

• Costs/profit per company• Consolidation of daily deliveries• Consolidation of warehouses & deliveries• Synchronizing delivery days with existing warehouse

• Conclusion and Learnings

Methodology

1. Generate latitudes and longitudes for postcodes

2. Calculate service time for each customer

3. Find scenario based optimal routes

4. Calculate costs and revenues resulting in profit

5. Comparative analysis

6. Find central warehouse location

7. Business decisions

Open Door Logistics

• Open source software

• Performs geographic analysis of customers, sales territory design and “last mile” delivery planning.

• Compatible with Excel

About the software

Overview of costsVehicle capacity 33palletsMax working time 10hours

Depot costs:

Fixed loading time sending depot : 15min/truck

Variable loading time sending depot : 1min/pallet

Customer costs:

Fixed unloading time at customer 15min

Variable loading time at customer: 1min/pallet

Truck costs: € 100.00 day € 0.40 km € 25.00 hour

€ 25.00 hour/overtime

Overview of revenues

#pallets Price #pallets Price1 € 25 18 € 1982 € 44 19 € 2093 € 60 20 € 2204 € 72 21 € 2105 € 85 22 € 2206 € 96 23 € 2307 € 112 24 € 2408 € 120 25 € 2509 € 126 26 € 234

10 € 140 27 € 24311 € 143 28 € 25212 € 156 29 € 26113 € 169 30 € 27014 € 168 31 € 24815 € 180 32 € 25616 € 192 33 € 26417 € 187

Exported data in ExcelDescription Column name ExampleNumber of the truck Vehicle ID Vehicle 1Number of stops Stop-count/deliveries-count 6 customers

Starting time Start-time 07:48amEnding time End-time/end-time-window 17:00pm

Maximum truck load Capacity 33 palletsNumber of quantities to be delivered

Delivered-quantity 7 pallets

Number of pallets at start Start-quantity-time 7 pallets

Delivery time spent Time 2:30:48 (2h 30min 48secs)

Total delivery cost Travel-cost 900 eurosTotal travelled km Travel-km 725 kmTotal travelled time Travel-time 2:30:48 (2h 30min 48secs)

Time = Travel time + Service TimeTotal time= Loading Time + Time (Loading time = 15mins+ 1min*Number of quantities to be delivered)Travel cost = 0.4 * Total travelled km

Q1: Which company is the most profitable?

METHODOLOGY:

- Filter the data for a company for a particular day- Use ODL to generate route details and costs- Calculate cost for last mile delivery on a day and revenue.- Perform same action for all companies for all days- Calculate overall costs and revenue for each company

- Comparison of average fill rate for each company AND calculate overall costs and profits.

Revenues

Costs

Profit

Company Revenues Cost Profit Average fill rate

A € 2,958.00 € 2,239.45 € 718.55 84%

B € 1,725.00 € 2,250.81 -€ 525.81 53%

C € 8,898.00 € 4,918.83 € 3,979.17 87%

D € 4,190.00 € 3,079.23 € 1,110.77 58%

E € 3,657.00 € 4,166.08 -€ 509.08 30%

Q2: What are the savings by combining transport from existing warehouses?

METHODOLOGY:

- Regroup all deliveries of all companies per day

- REVENUES – COSTS = PROFIT

COSTS = (NUMBER OF TRUCK * € 100) + (TRAVELLED KM * € 0.40) + (NUMBER OF HOURS * € 25) + (OVERTIME * € 25)

Number of hours = loading time + travelling time + service time

- Comparison of average fill rate per day AND calculate overall savings

Assumption: companies handling internally the deliveries to other warehouses (costs therefore excluded)

Days Savings % savings Average fill rate before

Average fill rate after

Median fill rate

Monday € 1278 41% 59% 92% 93%

Tuesday € 1688 51% 59% 90% 100%

Wednesday € 1528 47% 59% 91% 97%

Thursday € 2077 58% 70% 93% 93%

Friday € 1878 56% 63% 91% 91%

€ 8,451

Increase in average fill rate from >59% to >90%

Savings of € 8,451 (costs before consolidation – costs after consolidation)

Q3: What are the savings by combining transport from new consolidated central warehouses?METHODOLOGY:

Centre of gravity based on locations of warehouses: Oosterzele

Centre of gravity based on customer locations: Brussels

- Calculation of centre of gravity: Geographic midpoint (Based on website: www.geomidpoint.com)

Decision based on costs for customers deliveries being the highest in the long-term. Having warehouse closer to customer decreases lead time.

Assumption: Warehouses were rented and that the lease is over/Close existing warehouses and open a central warehouse

Current customer location - density

Consolidation of warehouses & deliveries• Find centre warehouse location centre of gravity

Latitude: 50.868

Longitude: 4.324

BRUSSELS

Consider outside Brussels (cheaper warehouse prices)

Savings % savings Average fill rate before Average fill rate after Median

€ 1562 50% 59% 92% 93%

€ 1826 55% 59% 100% 100%

€ 1767 54% 59% 91% 91%

€ 2025 56% 70% 93% 100%

€ 2196 65% 63% 92% 97%

€ 9,376

Savings were higher by having a central warehouse than consolidating transportation: € 8,451 to € 9,376 (profit from € 4,773 to € 11,217)

Q4: Savings by better synchronizing delivery days among the companies

METHODOLOGY:

- Formatted the data available in order to consolidate based on:- Postcode

EXAMPLE: If a delivery is to be made at the same postcode for 3 different days, deliver all quantities at the later date.

In order to maximize profit AND maximize fill rate:

- Consolidate based on postcode + delivery dates

Biggest savings in companies delivering the least

Example of company E:- Consolidation by postcode

- Still in a loss

- Consolidation by postcode + days

- Made a profit

Company E in South with most deliveries in the North of Belgium

Q5: Existing network OR dedicated fleet of trucks

• Utilization of an existing network to inject upon.• Implementing a new network design of dedicated trucks would

seem costly and unnecessary

• Diminished CSR campaign given more carbon tax with more trucks

• An ICT system as well as a 3PL would prove beneficial given that further consolidation and synchronization could occur.

OPENING MINDSTO IMPACTTHE WORLD

Thank you for your attention.

Q & A