Introduction and challenges
In a context of omnichannel development and of pressure on lead times and inventory, logistics network design is strategically important, especially as it determines a large part of the logistics cost structure, the service offer and even the inventory level, in the medium term.
To ensure the robustness and scalability of the systems deployed, it is essential, before rethinking and challenging the relevance of the existing logistics network, to clarify the growth assumptions, anticipated changes in the customer offer and the service policy (delivery time, distribution of value between partners, distribution channels according to the customer and product mix, and competitive benchmarks) as well as the sourcing / industrial footprint assumptions.
The challenge is then to identify the number, location and role of each network site that minimizes the cost to serve while meeting the target service policy. This exercise requires a structured and collaborative methodology, the use of specialized optimization tools (lead times, size, staff, and storage and transportation costs) and finally a detailed knowledge of cost drivers.
The integration of operational constraints (local labor market, transportation and real estate offers, social and fiscal regulations, etc.) must be part of the considerations when assessing the optimal network design. Opportunities for outsourcing and mechanization must also be analyzed.
How we can help
- Definition of the company’s value proposition (current and prospective) and the customer service strategy (see service strategy), to clarify the requirements that the logistics network must meet
- Evaluation of the performance of the current logistics network in a cost-to-serve approach, based on our expertise and benchmarks
- Detailed network modeling, by selecting the most appropriate decision-making tools for the requirements, and combining them in an optimal way, to avoid the “black box” effect: significant data processing (e.g. dataiku), visualization and restitution (PowerBI), sub-constraint network optimization (Llamasoft, X Cargo), transportation and storage modeling (internal tools)
- Recommendation of the target logistics network by comparing different realistic scenarios through a structured analytical approach: modeling tools, knowledge of logistics markets (geographical specificities, service offer, regulatory requirements) created alongside our clients
- Definition of the migration plan from the current network to the target network, minimizing risks and supporting change
- Preparation of the RFQ, support for implementation