Development of an alternative logistics model to service retail customers


A logistics model to service retail customers when a predetermined requirement is met is stead of using schedules.

1. Problem Statement

  • The transportation of inventory is managed by the client on behalf of their retail customers;
  • The servicing is currently done on a schedule, the opportunity to service these customers only when required by the use of a dedicated vehicle should be investigated;
  • Create an alternative logistics model, with reduced costs (priority on logistics);
  • Develop and package a new product offering that provides the same level of service but at a lower operational cost;
  • Develop a costing model for the new product offering;

2. Solution Approach

  • Define criteria for Proof of Concept (number of customers, geography, density, volumes etc.)
  • Feasibility study of a new product offering and logistics model.
  • Geocoding of customers;
  • Statistical analysis on historical transactions (per customer) to identify volumes and trends;
  • Calculate servicing triggers using Monte Carlo simulation modelling (@Risk)
  • Perform a Desktop Proof of Concept (no disruption in daily operations):
  • Transactional data (value, volume, timestamps etc. )
  • Daily routing and planning (travel time, travel distance, vehicle limits, services etc.)

3. Project Outcomes

  • Changes in the logistics operational model to move from scheduled services to a dedicated vehicle(s);
  • Use a pull servicing methodology in stead of pull;
  • Criteria to service customers only when needed (based on volumes and values);
  • Up to 20% saving on total cost to provide the same service level;