Distribution logistics and supply

The demands on distribution logistics today are many and varied. Getting the distribution right is more than just creating daily routes and delivering to the customer.

Distribution logistics and supply: Realising the right concept

Cluster planning and the optimal delivery day structure lay the strategic foundations for all further detailed optimisation. Complex simulation tools are used to identify potential synergies in distribution logistics.

Typical distribution logistics questions:

• What are the optimal delivery days and frequencies at individual customer level?
• What type of fleet management is appropriate: in-house or outsourced?
• Are current freight matrices and terms appropriate?
• How can distribution costs be allocated on a cause-and-effect basis?

Range of distribution concepts

Optimising delivery days and determining the optimum delivery frequency are at the heart of distribution concept planning. Peak weeks are smoothed out or reduced through cluster planning. We determine the cost advantages and disadvantages of managing the fleet in-house or with a third party. The evaluation of qualitative aspects is important in the selection of a suitable distribution concept. Benchmarking the terms and conditions of service providers can also be helpful. For example, we can use cost allocation methods by customer, customer group or product range to create transparency and develop targeted cost driver models.

What does optimising delivery day and frequency mean in practice?

In distribution logistics, it is desirable to achieve an even weekly utilisation of both the distribution centre and the fleet. Typical peak weeks, which are unavoidable due to consumer behaviour or fresh product ranges, for example, can be counteracted by delivering less critical ranges such as dry goods or frozen foods on weaker weekdays.
The difficulty often lies in breaking down old structures: local management has its own typical arguments to prevent any change in the delivery day structure and delivery frequency:

• The goods have been arriving on this or that day of the week for years.!
• We are understaffed on other days of the week and/or at other times of the day and therefore we cannot accept the goods.!
• We lose sales when the customer is faced with empty shelves!

The trick is to involve the point of sale in optimising distribution logistics costs. In other words, to pass on logistics cost advantages directly or indirectly. This can be done either by extending existing delivery windows or by offering incentives to optimise order quantities, e.g. for full pallets, which can also have a cost-reducing effect. In addition, rebates for delivery day changes or the waiving of certain delivery days can have a positive impact on the overall distribution concept.

Distribution logistics concepts – What is cluster planning?

Although the term cluster is poorly documented in relation to logistics issues, it is essential. In business, a cluster generally describes a group or cluster of locally connected companies, i.e. a regional cluster.

In terms of distribution concepts, a cluster is therefore a regional accumulation of destinations to be delivered on one delivery day. The more strictly a delivery area can be divided into clusters, i.e. the fewer exceptions are allowed, the greater the theoretical savings in terms of kilometres driven. This is where logistics consultancy comes into play: ORGAPLAN Logistik GmbH uses complex simulation models to optimise the composition of the clusters prior to the actual route optimisation.