Distribution network optimization: P&G’s success story

Февраль 28, 2020 Egor Yakovlev

Supply chain network optimization using distribution network optimization software

For more than 30 years, consumer goods giant P&G has been establishing its presence in South East Asia, shipping products to most remote areas and expanding its supply chain network across the region. Expansion, however, came with its challenges: for Indonesia, how could P&G cost-effectively produce, distribute and market their goods in a country with 15,000 islands that occupies a space nearly 15 times the size of England?

The concerns were clear, and P&G’s Indonesian headquarters took the decision to reinvent their supply chain network and inventory policies. Drawing on their global and corporate experience, management concluded that digital distribution network optimization software would be the best, most cost-effective option for improving network performance and establishing lean logistics practices.

They tasked Singapore-based SupChainEra with determining a feasible distribution network design that would ensure high network performance compliant with corporate standards in terms of inventory and service levels.

The consulting team from SupChainEra needed to build a digital twin of the current network, and then use the base model for logistics and planning optimization purposes. As the simulated network was extensive, accounting for 20,000 sites within the modeled region of South East Asia, and included multiple tiers, the team opted for anyLogistix distribution network optimization software. It is a natural fit for creating large-scale network models, and, to quote the consultants, “will help speed up development process by providing analytical optimization and dynamic simulation in one package”.

When the design and policies were finalized and compared to the baseline design, the optimized network showed better performance in terms of service level and cost saving. Average inventory levels dropped 35% and total costs decreased to 20%.

More about the project – in the P&G case study.

Read the case study