Proceedings of ICLT 2017
REDESIGN A TIME RESPONSIVE DISTRIBUTION NETWORK USING SIMULATION
Hassan Mirzahosseinian; Gajanan Panchal; James
The Logistics Institute – Asia Pacific, National University of Singapore, Singapore; NUS Business School, National University of Singapore, Singapore; The Logistics Institute – Asia Pacific, National University of Singapore, Singapore
International Conference on Logistics & Transport 2017, Bangkok, Thailand, pp. 311-318
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Abstract
This paper aims to redesign a more effective distribution network for a fast-moving consumer goods (FMCG) company in Singapore so as to ensure a higher service level with minimized cost structure. Both strategic and operational approaches are applied in this study. At the strategic level, well-known distribution network models are introduced and five most important factors required for selecting the design of the distribution network for the company (response time, product availability, inventory, transportation, and facility & handling) were identified. After analysing the delivery data of the company, two demand and delivery patterns were identified for the five current delivery channels. For the second part of the study, at operational level, an agent-based simulation model is developed to investigate the trade-off analysis of service level versus cost. Clustering method is implemented to aggregate demand points according to their geographical locations. At strategic level, two different distribution network designs are recommended for identified demand and delivery patterns. For the first demand pattern, manufacturer storage with direct shipping is suggested while distributor storage with last mile delivery is recommended for the second demand pattern. At the operational level, a simulation model assists the company to analyse the effects of different scenarios such as opening a new DC, modifying fleet size, changing replenishment policy, closing/opening channel(s), etc. For instance, the results revealed that adding a new distribution centre reduces the operating costs by 30%. This cost saving covers new DC’s expenses such as rental, manpower, etc.
Keywords
Distribution network; Simulation model; Service level; Operational costs; Consolidated deliveries
Citation
Hassan Mirzahosseinian; Gajanan Panchal; James (2017). REDESIGN A TIME RESPONSIVE DISTRIBUTION NETWORK USING SIMULATION. Proceedings of the International Conference on Logistics & Transport (ICLT 2017), Bangkok, Thailand, pp. 311-318.