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| Client: | A major chemical and petrochemical producer of a base product to customers in the U.S. | |||||
| Problem: | High costs in the distribution network were attributed to high fixed and variable costs of the distribution centers, high transportation costs to and from terminals and DCs, and a large number of facilities. | |||||
| Approach: | Use CAPS Supply-Chain Designer to analyze the distribution network. Build baseline scenario using one year of historical data. The baseline and other scenarios needed to incorporate costs for each mode of transportation, capacity constraints, and handling costs. Create new optimization scenarios to evaluate changes in costs by exploring different alternatives of closing one or more sites and using other transportation modes. | |||||
| Results: | Implementation
of the optimal distribution network will lead to: • Reduction of DC network from five to two distribution centers • Identification of lower cost transportation modes in some routes • Savings of 16% of baseline total costs • Improvement in customer service by locating product closer to the customer • Closing of an additional DC would save an additional 14% |
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