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"ProCogia advised the logistics division of a CPG company in route optimization for a delivery sub network in the US." Ryland H. and Diane R.

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Scenario

Client has a network of dealers who have warehouses across multiple locations, which are serviced by independent truck operating companies. The current transportation network is inefficient, incurring significant expenses to the client. The current routes need to be evaluated to improve efficiency and decrease costs.

Key Objectives

  • Evaluate tangible benefits of contracting to single transportation service provider and multisource from various warehouses.
  • Detailed analysis of the current routes to create adaptive route networks depending on changes in demand patterns and partners.

Methodology

  • A preliminary analysis with raw data was conducted to understand current performance metrics and functional limitations.
  • With an insight of performance metrics and their constraints, a scenario analysis was performed using genetic algorithms and heuristics to advance the proposed solution.
  • The proposed solution was then tested and optimized with specific scenarios of demand, process time and operating capacities, and through sensitivity analysis.
  • An oversight analysis was performed to identify factors that could be improved and compile insights to decrease expenses.

Figure 1: Current Flow

Previous Supply Chain

Figure 2: Proposed Round Trip ‘paths’ Along Network Arcs

Revised Supply Chain

Results

The route optimization techniques deployed by ProCogia helped the client save approximately $280,000. Changes were proposed to the client for parameters, such as, truck size, truck speed and stop time to create an optimal usage of the transport network. It was also found that there is no seasonality in demand pattern. This is highly scalable analysis and extending the recommendations from one sub-region to other regions in US and Canada can provide significant savings in the logistics operations.