Impact of Routing, Mode Selection and Fleet Decision in Optimizing - - PowerPoint PPT Presentation

28 Nov 2018

11th Global Supply Chain and Logistics Summit www.sclgsummit.org

Impact of Routing, Mode Selection and Fleet Decision in Optimizing Supply Chain Logistics

Presented by:

• Dr. Amit Garg

Founder & Chief Scientist,

USA | UAE | INDIA | NEW ZEALAND

In Mathematics

28 Nov 2018

11th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011 Agenda

Inbound Supply Chain Analytics in Optimizing Logistics Inventory and Transportation Costs Optimization Selection of Distribution Mode Solution Approaches Real World Logistics Challenges Benefits

28 Nov 2018

11th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

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

28 Nov 2018

11th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Analytics Framework for Logistics Optimization Boundary less Information flow 3pl service providers Logistics Optimization Integrated service

• perations

Integrated Platform for Visualization

28 Nov 2018

11th Global Supply Chain and Logistics Summit www.sclgsummit.org

9 Feb 2011

Optimize Inventory & Transportation Costs

• The optimized Supply Chain mainly juggles between two factors
• Inventory costs
• Transportation costs
• The balance should be maintained between both the cost factors

More Transportation Cost High Frequency of Shipments Low Inventory Cost

The real success is to keep the Transportation cost low along with high frequency of Shipments

28 Nov 2018

11th Global Supply Chain and Logistics Summit 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

• Truck Load ≥ 85%

Milk Runs

• 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)

28 Nov 2018

11th Global Supply Chain and Logistics Summit 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

• Distribution centres / Retail

stores located in convenient areas (frequently visited areas)

• Utilization of fleets with Full Truck

Load Third Party

• Distribution centres / Retail

stores located in remote areas

• Utilization of fleets with Less

than Full Truck Load Fluctuating Demand 50 – 75 trucks everyday Private Fleets (50 trucks) for certain Demand Third Party Fleets for fluctuating Demand

28 Nov 2018

11th Global Supply Chain and Logistics Summit 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.

28 Nov 2018

11th Global Supply Chain and Logistics Summit www.sclgsummit.org

Solution Approaches

To identify similar Supplier appointment time in the week during multiple visits

• 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 Multiple Travelling Salesman Problem Approaches Vehicle Routing Problem Bin Packing Problem Truck Routing via multiple Suppliers Loading of truck from Suppliers

28 Nov 2018

11th Global Supply Chain and Logistics Summit 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

• r 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

28 Nov 2018

11th Global Supply Chain and Logistics Summit www.sclgsummit.org

Thank You

USA | UAE | INDIA | NEW ZEALAND

Contact : amit@ormae.com www.ormae.com