Developed a cross vertical supply chain optimization tool considering complex inventory, transport, warehouse & product replenishment decisions
Title: We developed a cross vertical supply chain optimization tool with the objective of optimizing the overall costs of the supply chain comprising of freight, warehousing costs, inventory holding costs and taxes
Background :
- A need for supply chain tool was felt having robust simulation capabilities, creation & analysis of multiple strategic scenarios, excellent reporting capabilities and having enough flexibility to cater to all verticals
- The tool should ascertain and evaluate complex business scenarios with respect to timing & quantum of capital investment, facility decisions, transport decisions, inventory holding and product replenishment decisions, etc
Business Scenario:
Tool Requirements were
- Tool should be able to evaluate complex inventory decisions such as, where and what is the optimal amount of inventory to be stored at each echelon based on demand variability
- Tool should be able to evaluate product replenishment decisions such as, model (Push or Pull based), applicability of dynamic or static norms and source of product replenishment at every facility in each echelon from the upstream facilities
- Tool should be able to analyze transport decisions such as, mode, capacity, shipment size and frequency of shipment and evaluate the trade off on inventory and freight costs
Our Solution:
Supply Chain Model:
- A analytical Model was built capturing inventory in the supply chain in multiple echelons of the supply chain network
- At each level, evaluation of inventory norms and mode of replenishment (push or pull) was derived based on downstream demand variation, upstream supply reliability, frequency of replenishment and transport lead time
Tool Output included:
- Optimal solutions balancing Inventory Holding Costs, Freight Costs, Customer Service and Business Requirements
- Stocking Norms at each factory, warehouse, replenishment frequencies and mode of replenishment based on pull or push
- Selection of optimal product flow routes, optimal number of mother warehouses and service warehouses best suited for minimizing cost and fulfilling service level requirements
- Selection of the right modes and shipment sizes of transportation along all routes of the distribution network
- Simulation, Evaluation and selection of alternative product flows, inventory norms, and replenishment processes
- Evaluating the total cost of the supply chain network for the optimal scenario and for all simulated scenarios