Impact of Routing, Mode Selection and Fleet Decision in Optimizing Supply Chain Logistics Presented by: Dr. Amit Garg Founder & Chief Scientist, In Mathematics USA | UAE | INDIA | NEW ZEALAND 11 th Global Supply Chain and Logistics Summit 28 Nov 2018 www.sclgsummit.org
Agenda Inbound Supply Chain Analytics in Optimizing Logistics Inventory and Transportation Costs Optimization Selection of Distribution Mode Solution Approaches Real World Logistics Challenges 9 Feb 2011 Benefits 11 th Global Supply Chain and Logistics Summit 28 Nov 2018 www.sclgsummit.org
Inbound Supply Chain Logistics Minimize the cost of an Inbound Supply Chain Logistics Industry problem • On the basis of shipment frequency (once a week/multiple times a week) • Routing, and mode selection Direct shipment Milk-runs Hub & spoke model 9 Feb 2011 11 th Global Supply Chain and Logistics Summit 28 Nov 2018 www.sclgsummit.org
Analytics Framework for Logistics Optimization Integrated 3pl service service providers operations Integrated Logistics Boundary less Platform for Optimization Information flow Visualization 9 Feb 2011 11 th Global Supply Chain and Logistics Summit 28 Nov 2018 www.sclgsummit.org
Optimize Inventory & Transportation Costs The optimized Supply Chain mainly juggles between two factors o Inventory costs o Transportation costs The balance should be maintained between both the cost factors Low Inventory Cost High Frequency of Shipments 9 Feb 2011 More Transportation Cost The real success is to keep the Transportation cost low along with high frequency of Shipments 11 th Global Supply Chain and Logistics Summit 28 Nov 2018 www.sclgsummit.org
Selection of Distribution Mode This is a direct encounter between Direct Shipment, Milk Run Shipment & Consolidated Hub Shipment Truck Load ≥ 95% Direct Shipment Suppliers / Plants are closer Milk Runs Truck Load ≥ 85% Otherwise ---> Hubs * If total time including hub is significantly greater than the total time between only supplier(s) & plant(s), then select Milk Runs If multiple potential hubs, select the one that takes the least total time (not total distance) 11 th Global Supply Chain and Logistics Summit 28 Nov 2018 www.sclgsummit.org
Private Fleet Vs. Third Party Fleet Selection Most of the Firms / Companies takes the decision about either to use its own private Fleet or to use the services of Third Party Logistics Providers for Transportation of Products / Goods Some of the criteria for decision making Private Fleet Third Party Distribution centres / Retail Distribution centres / Retail stores located in convenient stores located in remote areas areas (frequently visited areas) Utilization of fleets with Less Utilization of fleets with Full Truck than Full Truck Load Load Private Fleets (50 trucks) for certain Demand Fluctuating Demand Third Party Fleets for fluctuating Demand 50 – 75 trucks everyday 11 th Global Supply Chain and Logistics Summit 28 Nov 2018 www.sclgsummit.org
Real World Optimization Challenges Plant-Dock level restrictions: The number of docks of a plant, a truck can go to. Inter & Intra country border restrictions. Supplier time windows. Department of Transportation restrictions. Suppliers who prefer similar pick-up times. Problem scale can range up to 1000+ suppliers, 50+ plants, and 5+ hubs. 11 th Global Supply Chain and Logistics Summit 28 Nov 2018 www.sclgsummit.org
Solution Approaches Approaches Vehicle Routing Bin Packing Problem Problem Loading of truck from Truck Routing via multiple Suppliers Suppliers LP/MIP approach to combine Bin Packing & Vehicle Routing Optimization If large problem, LP/MIP approach can be carried out in multiple iterations , each solving an MIP problem To identify similar Supplier appointment Multiple Travelling Salesman Problem time in the week during multiple visits 11 th Global Supply Chain and Logistics Summit 28 Nov 2018 www.sclgsummit.org
Benefits Total cost savings up to millions of dollars per year for large supply chains. Big time savings & convenience during tactical planning than manual or excel based approach. Planners can run multiple what-if scenarios. Combination of Private fleet and Third Party fleet will give robustness to the Distribution system Transportation costs can be kept low with high frequency of shipments by selecting the Distribution mode in an optimized way 11 th Global Supply Chain and Logistics Summit 28 Nov 2018 www.sclgsummit.org
Thank You USA | UAE | INDIA | NEW ZEALAND Contact : amit@ormae.com www.ormae.com 11 th Global Supply Chain and Logistics Summit 28 Nov 2018 www.sclgsummit.org
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