Company Overview:
- $1 billion US-based retailer with 500+ store locations, 50 markets, $100 million in costs
- Client had not optimized its network in over a decade
Project Scope:
- Assess opportunities accruing from moving to a DC model from DSD (Direct Store Delivery) by vendors for NAFTA Parcel, TL, LTL; Global Ocean and air
- Built detailed operating and cost models that identified key assumptions, showed sensitivities and helped client to clearly see how the strategy would work for their logistics network
- Validated of current operating model, service requirements, activity and cost review
- Created a mixed-integer programming model and optimized to solve for required service levels at minimum cost
Project Outcomes:
- Findings showed that cost savings in transportation would be eclipsed by the large investment required to build a DC
- Client made an informed decision and continued to operate using a DSD model
- Avoided a $36 million investment that would have generated negative ROI
