By Cobena June 22, 2020Data Modeling

Distribution warehouse location optimization

Opportunity

Distributor warehouse locations have been strategically placed in key centers of economic activity to maximize the operational efficiency of the client’s national distribution network. Because warehouse locations have been based on economic conditions more than 7 years prior to the project, there is a need to validate whether the current warehouse locations are still in key centers of economic activity today.

Approach

Developed a mathematical model that represents the current distribution network and identified the optimal placement of warehouse and resupply point sites to achieve the following objectives: (1) Minimize the travel time to reach covered accounts, and (2) maximize the amount of sales within a 30-, 45-, and 60-minute travel time radius.

Results

  1. US$153M in sales\' worth of store coverage improvement by relocating current warehouses to optimal locations
  2. 43 warehouses identified as more than 15km away from the optimal locations
  3. 14.3 minutes faster in average travel time (31.8 --> 17.5mins) if network follows optimal locations
  4. 147 resupply points lessened (553 --> 406) if network follows optimal locations