Distribution Network Modelling

Client: Government Defence Organisation

Background

Our client conducted a high level impact assessment of collapsing 24 wholesale storage sites into seven nominated To Be wholesale sites. GRA was asked to perform a more detailed analysis of both the inventory and distribution costs associated with the proposed To Be storage and distribution network in order to confirm the associated costs and/or savings.

Challenge

The project challenges included:

• accessibility quality and volume of data (millions of records)
• very low usage/consumption rates
• developing and agreeing the stocking policies of the To Be networks being modelled
• developing necessary assumptions where neither data nor policy existed
• assessing the feasibility of the To Be network

Approach

GRA conducted an inventory analysis with the advanced planning system GAINS (General Adaptive Inventory System) and a leading Supply Chain Network Optimisation toolset.

• Optimisation of inventory holdings for each item in each location to meet service level targets at the lowest cost

GRA performed a Baseline Cost Analysis on the current distribution network.
The future physical distribution network model has been built to estimate savings benefits including:

• balanced inventory levels
• other means of transports

Outcome

• inventory reduction of approximately $20m in the To Be network.
• excess inventory reduction opportunity of greater than $100m (both As Is and To Be network)
• To Be distribution costs increased by $2.26m i.e. by less than 10% of the As Is distribution costs (the warehousing cost reduction were not in the scope of this analysis)