Redesigning and optimizing a Distribution Network Strategy

What is SOAP Simulation ?

It is a supply-chain simulation tool allowing back testing of what if scenarios.

One question our system is built to answer:

“What if my future supply-chain distribution strategy was implemented last year ?”

Run numerous „What if‟ scenarios and get detailed financial and operational performance reports.

Distribution network redesign

A distribution network strategy defines how we move goods to market, from the suppliers to the customers thru the company supply-chain network, therefore it need to constantly adapt to external and internal constraints.

Redesign main drivers

Mergers and acquisitions

Business growth or downsizing

Competitive pressure to increase costs efficiency

Change in customer service requirements

New market opportunities

Change in supply or customer base

Increase in fuel / transportation costs

Change in local logistics optimization (pack, size, EOQ…)

Distribution network redesign

What are the most encountered question when redesigning a supply-chain network strategy?

What is our best sourcing strategy?• Should we do direct to store distribution? (Per family, category, velocity...)• Should we source to each distribution center or thru a primary location?• When should we do supplier cross-docking replenishment?• What is the financial impact of the different replenishment strategy (Full truck, minimum quantity, JIT, Frequency, scheduled...)?

What is our best distribution strategy?• How many distribution centers?What size?• Where are the best locations?• which type of product (family, category, velocity, sourcing ...)• What market should be served by each distribution center?• What is the optimum stocking strategy?• How can we optimize global distribution costs?• How do we reduce working capital in our distribution network?

What is our best transportation strategy?

• For which suppliers should we use an integrated inbound freight?• Which transportation modes and partners should we use from each site?• How can we consolidate and optimize our freight?• What are the best routes for my shipments• What strategies can we use to minimize carbon footprint

SOAP back testing methodologyphase 1 – business assessment

Business assessment

Data gathering

Model baseline scenario

Model alternate scenario

Detailed result

analysis

Business assessment:

Identify supply-chain redesign project‟s scope

Identify current business model

Identify key business issues and main drivers

Identify company strategic vision.

SOAP back testing methodologyphase 2 – data gathering

Data gathering

Model baseline scenario

Model alternate scenario

Detailed result

analysis

Data gathering

Develop data gathering requirements◦ Master data file: Item, Vendor, Customer/Site

◦ Inventory file: inventory count, Movements

◦ Marketing file: Promos, assortments (new items, end of life …)

◦ Tags

Assessment of data availability and data accuracy.

Develop test files, data control, validation

Business assessment

SOAP back testing methodologyphase 3 – Model baseline scenario

Model baseline scenario

Data gathering

Model alternate scenario

Detailed result

analysis

Model baseline scenario

Construct and simulate baseline scenario, this is the representation of the current supply-chain business model

Calibrate baseline model to actual spending, this is a major task that allow thru a „AS IS‟ simulation run to validate the correctness of the data and the correctness of the current business model design

Business assessment

SOAP back testing methodologyphase 4 – Model alternate scenario

Model alternate scenario

Data gathering

Model baseline scenario

Detailed result

analysis

Model alternate scenario

Define main alternative group of scenarios to evaluate

Construct and simulate alternative scenarios

Compare alternative scenarios simulation results

Business assessment

SOAP back testing methodologyphase 5 – Detailed results analysis

Detailed result

analysis

Data gathering

Model baseline scenario

Model alternate scenario

Detailed results analysis

For each group of scenarios provide detailed financial report

For each group of scenarios provide detailed operational report

Business assessment