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Aqua MCG Distribution Network Optimization tool works with the objective of optimizing the economic value added to the shareholder capital by evaluating every investment made over multi period at its net present value.
We firmly believe that looking at just cost reduction with service level constraints as the driver for network design or redesign decisions is a deficient way of evaluating your distribution network. Instead these decisions are a continuous trade off between the costs and the service levels. The service level enhancement has the potential to impact the revenue significantly thereby resulting in a net value add for the organization despite higher operational costs or capital outlays. This forms the basis of our Economic Value Add (EVA) optimization
Components & Capabilities
1. Analysis, Aggregation :
a. Multi commodity, multi echelon and multi period evaluation
b. Measurement of the impact of changing service levels on the revenue
c. Optimal timing of capital outlays based on NPV consideration of the EVA generated
d. Clustering facility of customer/demand data, visualization of clustering
e. AHP (warehouse selection)
f. Pareto analysis
g. Ability to study the effect of aggregation on costs and model accuracy
h. Value Stream Map
2. Simulation Capabilities
a. Stochastic demand at changing service levels in different periods
b. Various inventory replenishment models
c. Various transportation and warehousing models
3. Transportation Rate Database
a. Schema and classifications based on multiple dimensions
b. LTL/FTL freight rate Characteristics
c. Ship, air, road, rail rates
d. Integration with third party services
4. Flexibility :
a. Accommodate various definitions of service levels : responsiveness, reliability, flexibility & agility
b. Accommodate existing warehouses capacities and expansion of existing capacities
c. Market constraints
d. Unalterable/Fixed flow or path patterns for specific paths or specific SKUs
e. Inter warehouse flow
f. Accommodate tax and tariff structures
5. Creation & Analysis of multiple strategic scenarios and best possible use of business assets to reach the optimal values
6. Data and Model Validation
a. Ability to validate model and data, including sensitivity analysis
b. Ability to drill down results to identify key drivers : clarity of model and model results
7. Reporting capability
a. Generation of user friendly reports that elucidate the different network decisions taken for the to be model for the different periods
b. Clearly showcasing the impact of the business decisions on the supply chain performance through metrics and KPIs
Business decisions evaluated
1. Timing and quantum of a capital investment
2. Facility decisions: Echelon, no., Site, size, capacity and set up or close down decisions with regard to a facility
3. Transport decisions: Mode, capacity, shipment size and frequency and routing decisions
4. Inventory decisions: Inventory stocking decisions for different products - where and what is the optimal amount of inventory to be stored at each echelon
5. Product replenishment decision: Model and source of product replenishment at every facility in each echelon from the upstream echelon
6. Order servicing decisions: Customer order to be optimally serviced from which upstream facilities
7. Service level decisions: Optimal service levels at which the distribution network should function
Cost Considerations
Operational costs
1. Transportation cost across facilities to points of demand,
2. Total Warehousing costs including facility overheads, storage and handling costs
3. Taxes & tariffs
Asset costs
1. Facility set up costs
2. Equipment & vehicle costs
3. IT system costs
4. Inventory capital costs
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