Supply Chain Optimization Framework and DSD Case Study

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Supply Chain OptimizationFramework and DSD Case
Study

• Sebastian Valencia

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Agenda

• Introduction
• Optimization Solutions
• Challenge
• Best Practices
• Case Study
• About Clarkston

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Agenda

• Introduction
• Challenges in Todays Business
• Optimization Definition
• Modeling Patterns
• Optimization Solutions
• Challenge
• Best Practices
• Case Study
• About Clarkston

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Introduction

• Challenges in Todays Business Environment
• High service levels standards
• Reduce overall distribution costs
• Flexible distribution network
• Sub-optimal solutions
• Holistic optimization approach
• Optimization
• Is defined as the process of seeking the most
  favorable condition or solution to a goal by
  balancing the trading-off results on more than
  one criterion

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Introduction (Cont.)

• Optimization Modeling Patterns
• Sequence Models
• Knapsack/bin Models

• Partition Models
• Hub and Spoke Models

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Agenda

• Introduction
• Optimization Solutions
• Vehicle Routing
• Transportation Mode
• Location Selection
• Load Building
• Challenge
• Best Practices
• Case Study
• About Clarkston

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Optimization Solutions

• Vehicle Routing
• Assign routes to delivery trucks going from DC to
  stores
• Generates optimal routes reducing transportation
  cost under constraints of capacity, times,
  equipment, demand, etc.
• Developed on the basis of heuristics for the
  traveling salesman problem (TSP)
• Transportation Mode
• Modal-shift transportation selection
• Expanded regional routes into global
  transportation networks involving rail, air,
  water and road transportation modes.
• Optimal choice has great impact on overall total
  cost

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Optimization Solutions (Cont.)

• Location Selection
• Number of DCs
• Optimal location for DCs
• Deploy sourcing strategy
• Best alignment of customers and DCs
• Load Building
• Three dimensional load building
• Converts order line information into loading
  configuration
• Takes into consideration
• Weight
• Environmental and regulatory restrictions
• Packaging specifications
• Dimensional attributes
• Product family specifications

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Agenda

• Introduction
• Optimization Solutions
• Challenge
• Industry Perspective
• Recommendations
• Best Practices
• Case Study
• About Clarkston

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Challenge

• Industry Perspective
• 43 of companies see advance shipment
  optimization necessary for transportation
  management success
• 70 of best-in-class reduced freight costs
  through improved shipment optimization
• In international transportation, one of the
  recent advances is the use of optimization
  technology for shipment optimization and pooling
  opportunities
• The need is tangible, but it requires
  best-of-breed to provide a holistic approach
• Recommendation
• Need for tools that capture all areas of the
  distribution chain, and aim to solve the problem
  taking into consideration all restrictions and
  constraints along the network, optimally
  selecting feasible solutions that yield lower
  overall cost

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Agenda

• Introduction
• Optimization Solutions
• Challenge
• Best Practices
• Case Study
• About Clarkston

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Best Practices

• Take a holistic approach
• Perform a strategic network design
• Tactical level use
• Include what-if scenarios
• Perform sensitivity analysis
• Use genetic algorithms
• Perform periodic revisions

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Agenda

• Introduction
• Optimization Solutions
• Challenge
• Best Practices
• Case Study
• About Clarkston

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Case Study

• Company Background
• Leading c-store supplier of more than 16,000
  products, including tobacco, candy, snacks,
  health and beauty aids, and general merchandise.
  The company's 7 DCs serve customers in 28 states
  via a fleet of some 350 trucks.
• Challenge
• Their key customer is looking to consolidate some
  of their DSD vendors with the goal of reducing
  cost, complexity, and retail interruptions.
• Need to identify a method for providing these
  services in a profitable manner.
• Clarkston was engaged to help answer how DSD
  consolidation will affect its operations and the
  overall financial implications of this change.
• Solution
• Evaluate unique supply chain requirements (cold
  chain, frequency) for the new product lines to be
  consolidated
• Perform network optimizations, and capacity
  calculations to absorb change
• Benefits
• Position client to negotiate in intimacy with its
  key customer based on meaningful insights,
  information and direction provided by Clarkston
• Multiple scenarios and sensitivity analysis were
  performed, giving both, our client and its
  client the tools for a balanced negotiation
• Possibility to extend the service to other clients

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Case Study
Frozen
Cooler
Ambient
Existent
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Feasible Trailer Configuration
Ambient
Cooler
Frozen
Additional
36
Configurations considered but discarded
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Case Study
Unloading Options
Platform
Side Lift Gate
Rear Lift-Gate
Platform Ladder
Side Ramp
Rear Ramp
Unloading Options
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Agenda

• Introduction
• Optimization Solutions
• Challenge
• Best Practices
• Case Study
• About Clarkston

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Clarkston Consulting At A Glance

• Management and technology consulting firm
• Since 1991, we have helped clients align
  corporate strategy with business and technology
  initiatives to create realized and measurable
  value
• Serving global consumer products and life
  sciences companies
• Organically grown, privately held
• Annual revenues of over 50 million with over 300
  employees
• Financially solid, consistently profitable

Key measures of Clarkstons success 70 repeat
clients referrals 98.2 client satisfaction
rate
As measured by
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Our Services
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Consumer Products Leadership
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Consumer Products Industry Focus
Focused Experience
Sample Clients

• Food Beverage
• Home Personal Care
• Fast Paced Consumables
• Durable Goods

Functional Expertise

• Strategy and Process Services
• Organizational Effectiveness
• Strategic Gap and Alignments
• Operationalizing High-Level Business Strategies
• Business Process Re-engineering
• Program and Initiative Management
• KPIs/Metrics/Scorecards
• Process and Implementation Services
• Manufacturing and Supply Chain Solutions
  (planning execution)
• Demand Chain Solutions (trade, branding, category
  management, ideation, etc.)
• Customer Fulfillment Solutions
• Collaboration/Portals/Integration
• Contract Management
• Warehouse and Logistics Management
• Quality and Regulatory Management
• Finance/HR

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Questions
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More Information

• DSD Study currently being conducted in
  partnership with GMA and AMR research
• Contact us at 1-800-652-4274 or
  marketing_at_clarkstonconsulting.com
• Visit www.clarkstonconsulting.com/register to
  gain access to insight papers, articles, research
  reports, and case studies (short, one-time
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