Network Optimization Reduces Annual Supply Chain Costs

Situation

The customer had a complex supply chain with multiple costs and constraints for which intuitive local optimization was not a solution. The different countries in the region had different product specific tax structure while the company itself had multiple manufacturing plants and distribution centers. The company’s plan of capacity augmentation added to the supply chain complexity

Impact

The network was not the best supply chain for the organization, leading to sub optimality in the network

Resolution

An end to end supply chain optimization with an excel VBA based automation was performed. This enabled business teams to run it frequently. A framework was developed through which the various heads under manufacturing costs were categorized into fixed or variable cost to arrive at true variable cost. This helped to identify the total cost of manufacturing and to arrive at the optimal solution

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