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FOREST PRODUCTS INDUSTRY:
Distribution Network Modeling
and Product Inventory Analysis |
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Client: |
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A
global manufacturer of wood pulp and paper products. |
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Problem: |
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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. |
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Approach: |
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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. |
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Results: |
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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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