Decisiones Logísticas is a leading Colombian consultancy with over 25 years of experience. The company specializes in supply chain network design and optimization. It has implemented more than 130 complex projects, delivering hand-to-hand solutions for businesses in the Latin American market. The company redesigned the distribution network for a major Colombian household staple product distributor by applying network optimization tools and techniques.
The client’s company operates in a complex geographical environment, which required specific attention and search for optimal solutions. For instance, Colombia’s diverse topography includes the Andes mountains, Amazon rainforest, and vast rural areas, which complicate the transportation.
Nowadays, with more customers shopping online, improving last-mile logistics is also crucial. The consultants developed an optimal distribution center allocation plan, precisely tailored to meet regional demands by applying advanced network optimization techniques.
Optimizing logistics networks in Colombia is challenging. The country's diverse geography and regional economic disparities cause difficulties. To balance cost, customer service, and sustainability, strategies must address these unique obstacles effectively.
Decisiones Logísticas looked for supply chain planning solutions to model a logistics network for a Colombian distributor of home goods. The client is a large company with 4,500 customers located all around the country. The goal was to re-think and optimize current supply chain processes and the allocation of distribution centers (DCs).
While defining configurations of DC allocation, there were many logistical and commercial constraints to be considered:
Decisiones Logísticas chose anyLogistix to deliver optimized distribution network design. They started the project with a greenfield analysis experiment, which helped to define 40 potential locations of DCs.
The results of the greenfield analysis,
out of which 40 potential warehouse locations were chosen
Next, the consultants used network optimization to consider different characteristics of the supply chain, such as:
With the network optimization experiment in anyLogistix, the company modeled various scenarios and optimized the selection and sizing of DCs. For instance, the results indicated a decrease in transportation costs as the number of centers increased. This is due to a reduced distance to served customers. However, certain constraints (e.g., minimum number of customers served) led to cost increases when moving from 24 to 25 DCs.
The supply chain planning solution analyzed the impact of warehouse numbers on logistics costs (click to enlarge)
Considering the given conditions, Decisiones Logísticas identified an optimal range of 18 to 21 DCs. The availability of six size options allowed for cost-effective adjustments without significant cost increases. This flexibility proved to be critical in achieving an optimal distribution network model. Comparatively, scenarios with fewer size options showed higher costs due to limited flexibility. The capability of anyLogistix to run multiple scenarios was vital for the success of the project.
The possible DC locations and sizes that the consultants got after testing various network optimization techniques (click to enlarge)
Estimated total logistic cost in response to changes in the number of warehouses and an optimal zone (click to enlarge)
The consultants proposed a comprehensive supply chain planning solution for a major distributor in Colombia by leveraging advanced network optimization techniques alongside the capabilities of anyLogistix.
This final supply chain plan suggested opening 19 centers. The configuration included various sizes and locations. With anyLogistix, the consulting company estimated outbound transportation, DCs’, and inventory carrying costs, allowing it to make better-informed decisions.
Visualization of possible DCs allocation (click to enlarge)
Testing different scenarios with constraints is key to designing a cost-effective and efficient distribution network. This is where anyLogistix's network optimization techniques come in handy. Decisiones Logistics’ experts determined the best sizes and locations for distribution centers, so the supply chain planning solution proved to be worth applying in real life.
anyLogistix is a software that facilitates the path from theory to practice. It helps model with flexibility different cases for supporting our decisions in distribution network optimization.
—
Mery Iovanna Peña Fontecha
Consultant at Decisiones Logísticas
This case study was presented by Enrique Romero Motta and Mery Iovanna Peña Fontecha, Decisiones Logísticas, at the anyLogistix Conference 2024.
The slides are available as a PDF.
