Dairy Products Manufacturer in South Africa
Client wanted to optimize the supply chain from the purchase of raw milk from the farms through to the delivery of finished goods to its retail customers.
Profit Point engaged with the customer in a two-phased project to first optimize the raw milk procurement/manufacturing footprint and then to determine the optimal national distribution network for the future. This case study focuses on the distribution optimization.
Profit Point and the client developed a detailed model of the 8 DC national distribution network, using Profit Network™. Demand was modeled at the product family level delivered to the defined neighborhoods on a given delivery route and DC capacity was constrained by pallet space and multiple throughput metrics. The country was divided into sub-regions and multiple scenarios were evaluated within each of these sub-regions to determine the lowest cost distribution network that met customer service goals. Candidate DC locations were chosen by center-of-gravity analysis and local knowledge of likely cities for distribution. A sample of some of the options considered is shown below.
The client was able to reduce the capital spending plan by $40M US by optimizing the footprint and focusing the capital spend where it was really needed. Although the focus of this engagement was the capital allocation for the future distribution footprint, the client was also able to reduce ongoing operating expenses by $0.7M.