Creating a Repeatable Process for Using Network Optimization Models for Decision Support
A large U.S.-based meat processor had a thriving business focused on supply chain efficiency. While the company had done isolated network optimization projects in the past, there was uncertainty in whether the current U.S. network was optimal in terms of location and number of distribution centers (DCs), customer assignments and production matrix. The company wanted to build a model that could be run automatically each month by in-house modelers in order to support strategic network decisions and handle future scenarios.
Working alongside the customer’s modelers and management, the LLamasoft® solutions team performed extensive greenfield analysis and network optimization analysis using LLamasoft Supply Chain Guru®. Analysis of 10 possible scenarios validated the existing network and confirmed the current location of the company’s existing DCs as optimal.
Using Supply Chain Guru to analyze costs, the company determined that adding one more DC to their current network of six DCs could further reduce transportation costs. The model identified three possible cities for this DC location; the company plans to confirm the optimal location for the seventh DC by adding actual consolidation rates and re-running the model. Preliminary savings identified is around two to three percent of supply chain costs annually. The model also proposed a number of customer reassignments and transportation mode options that may reduce costs further. Next steps include adding LLamasoft Transportation Guru technology to identify optimal transport scenarios, including using a dedicated fleet and consolidation programs; as well as utilize greenfield analysis to identify potential new markets for their products.
By working together with LLamasoft experts during the project as well as a network optimization workshop, the customer gleaned the skills necessary to create a repeatable in-house process for using Supply Chain Guru models for ongoing decision support. Analysts were able to use scenarios and models as useful tools for explaining possible network changes to their executive team.