In a study that addresses a recreational products manufacturer's need for an overhaul of their North American distribution network due to two decades of acquisitions, organic growth, and surging import/export volumes, the authors develop a framework to optimize the distribution network. The following figure presents the company's network:
The network-optimization project considered the following five scenarios:
The optimization model suggested the following savings associated with the five scenarios:
Since the organization had already begun standardizing the packaging templates that showed distribution facilities how to optimize trailer loads (scenario 1). Given the potential savings from this scenario and the fact that the decision about cubic utilization is done at the plant and was relatively easy to implement, the company decided to pursue this scenarios. Additionally, merging the private fleets into the centrally controlled fleet (scenario 5) was also considered to be one of the top implementation priorities.
Source: Mary Holcomb, James Foggin. 2007. A framework for network optimization. CSCMP Supply Chain Quarterly, Q2/2007.