A Supply Chain and Distribution Network B2C & B2B

Challenge

The client's business can be summarized as the transportation and management of fresh food from Distribution Centers (DC) to Fulfillment Centers (FC) as a B2B setup, and from the Fulfillment Center to final customers as a B2C setup, with the objective of providing fresh food to customers in less than one hour guaranteed.

There were considerable expansion requirements due to increasing demand, requiring the client to select new Distribution Centers and Fulfillment Centers in a particular city to cover that demand while maintaining the one-hour delivery guarantee. This also meant potential expansion to new cities and countries.

The client wanted a very flexible playground to define the positions of the different FCs and DCs, the location of potential customers, distribution strategies, demand distributions, demand regions, etc., and use that information to analyze consequences in terms of customer service, distribution costs, and resource utilization.

Solution

For Supply Chain and distribution problems, AnyLogic is one of the best tools available with a powerful set of features such as GIS routing, easy configuration for flexible simulation models, easy save/load of complex scenarios on runtime, and a wide set of analysis tools.

A simulation model was developed that takes all the client's requirements into consideration with the possibility to manage Fulfillment Centers, Distribution Centers, and demand areas either before the simulation or during runtime. The client was able to change the structure of the network at any given point to see the impact of adding, editing, or removing an entity.

KPI Analysis

All necessary analysis tools were added to allow the client to understand the implications of changes on key performance indicators (KPIs). These KPIs were visualized in chunks of 4 hours, 1 day, and 1 week to understand the short, mid, and long-term consequences of strategic decisions.

Order Management Strategies

Some strategic decisions would change the dynamics of how a final customer is reached. Expert-system algorithms were used, which would change manually or automatically depending on the user decision.

Outcome

The outcome is a fully functional software that allows for flexible decision making in a simulation setting, having a toolbox of strategies, parameter definitions, algorithm definitions, automation, and other flexible features. The user can easily visualize a full palette of graphical and text data showing all the dimensions of the business with clear information on KPI implications. The software was used to define real expansion decisions along with the best action plan for the expansion setting (leasing new locations, modifying delivery vehicles, segmenting delivery zones, improving fulfillment center processes, etc.).

Project Features

• Industry: Supply Chain
• Model: Agent-Based + Discrete Events
• Duration: 2 months