In a constantly changing world, regular reviews and adjustments of logistical networks are essential. Software-supported network planning can provide significant added value for strategic decision-making by illuminating different scenarios. This article first presents cases in which a detailed analysis could be worthwhile, which data is needed to visualize the current situation, develop scenarios and which results can be expected from software-supported network planning.

Reasons for redesigning logistical networks: dynamics, expansion and sustainability

A number of situations make it useful to devote attention to the logistics network:

  • dynamics
  • expansion
  • sustainability

A change in the customer structure, new products or new sales channels create a ongoing dynamic that makes a cyclical analysis and revision of the network necessary and usually worthwhile. In addition, business expansion, such as the development of new sales markets and regions, changed service level agreements or new production-sites/warehouses, may require the network to be adjusted. In the future, the topic of sustainability and thus companies own carboon footprint, CO2-dependent tolls, CO2 pricing or necessary certifications will require a higher degree of transparency in a companies network.

What data is needed?

In order to develop a model, addresses to company and customer locations are necessary; geo-spatical information can then be determined from the available address. These are then combined with transactional data, such as: Order data, tour data, vehicles used, service providers and costs.

In addition, it is necessary to record and document all relevant restrictions, such as delivery time windows for customers, capacities of storage locations and vehicles or transshipment points.

The quality of the data is of great importance and can have a decisive influence on the time required for the first phase of a project. Data collection and enrichment prior to software use can range from a few days to several weeks. As a rule, data extraction and preparation take up 60-70% of the total time of a project.

What results can be expected?

With the use of network planning software, it is possible to create a good basis for decision-making on complex issues. The following three images show the development of different scenarios. First, the current situation is modeled as a baseline, followed by optimization steps. In most cases, an optimal customer allocation in relation to existing supply locations is the first scenario. Afterwards, additional Scenarios can be modeled, for example: Where is the optimal location for a possible additional supply location?

Below are other typical problems that can be dealt with efficiently if a network planning software is used:

  • Assignment of customers and orders to warehouse locations
  • Determination of the optimal number and location of locations
  • Simulation of decentralized vs. centralized delivery strategies
  • Determination of the ideal purpose of a warehouse location (e.g. inventory-keeping warehouses, transshipment points)
  • Optimal Vehicle routing
  • Weekday Planning

The examples mentioned above show the bandwidth of the core elements of logistical networks. Their change takes place in ever shorter cycles. For strategic decision-making and setting the right direction for a company, a structured review is worthwhile in most cases, can bring cost savings and makes significant contributions to our environment.