Case Study-Distribution Network Design-A

A leading FMCG company which entered into Bakery product category around 3 years back wanted to re-evaluate its supply chain network design.

Supply Chain Network Design

The company has its production facility located in Maharashtra and Rajasthan. From the two production facilities, supplies are made to 97 different cities having 169 different customers. Maharashtra and West Bengal together contribute about 40% of the total sales.

Existing Network Structure

Customer orders being delayed
Inability to capture changing demand patterns
Keeping a track of every stakeholder

The company asked to examine the network structure of Maharashtra and West Bengal in particular and suggest if changes are required.

Existing Network in Maharashtra

Network in Maharashtra

Proposed Supply Chain network

Existing Network Supply Chain Cost

Network StructurePrimary FreightWarehouse CostSecondary FreightSupply Chain Cost/Month
CFAs at Pune and Nagpur5,63,7243,24,282,4691676,999,79,684

In the existing set up Maharashtra had 3 warehouses located at Mumbai, Pune and Nagpur. Using Centre of Gravity approach along with other parameters such as infrastructure, proximity to highways, labour situation and cost, probable warehouse locations was suggested.

Proposed Network Supply Chain Cost

Network StructurePrimary FreightWarehouse CostSecondary FreightSupply Chain Cost/Month
CFAs at Pune and Nagpur5,63,7243,24,282,4691676,999,79,684

Center of the gravity method was used to find new DC location.

Outcome
  • 1. Supply to customer who require full truck load directly from plant
  • 2. Continue with taloza CFA, close down pune CFA
  • 3. Open new CFA at Ahmednagar & kolhapur
  • 4. Recheck supply fessibility to Nagpur

Result

The overall supply chain cost reduced by around 20% per annum.