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Forest
Products Industry:
Distribution Network Modeling
and Product Inventory Analysis
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| | Client: |
| A
global manufacturer of wood pulp and paper products.
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| | Problem: | |
The wood pulp
and paper processor operated a distribution network transporting more
than 600,000 tons of product utilizing rail, ship, TL, LTL and intermodal
modes in multiple lanes. The network consisted of five manufacturing
facilities, three ports of entry, eight distribution centers, and
a customer base of about 1000 spread across the U.S. and Canada. Over
40% of shipments were in excess of 500 miles and 6% were in excess
of 1,000 miles. The client wanted to reduce the number of distribution
centers while improving cost structure and customer service.
| | | Approach: | |
Develop a distribution
model of the current system and establish a baseline cost for the
operation. Utilize modeling techniques to optimize the network based
on reducing the number of distribution centers, reduce average distance
from distribution center to customer, optimize use of ship, intermodal
and rail transportation from manufacturing facility to distribution
centers, optimize truck transportation from distribution centers to
customers, and provide service on orders within 24 hours of receipt.
| | | Results:
| |
A redesigned
distribution network resulted in 95% of all DC and plant direct shipments
being less than 500 miles away from the customer. Traffic lanes were
reduced by 50%. Operating cost reductions in excess of $5,000,000
were identified. |
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