Work Project

Team 11
Bruno Albuja 2081193
Alperen Cura 2081340
Adam Heshmi 2072089

2023
 GFA Analysis
Since the company stated that it had problems with Belgium DC, we decided to close this DC and worked on new
scenarios in the GFA.

Central DC in Italy Central DC in Italy Central DC in Italy

Regional DCs: Regional DCs: Regional DCs:
➢ Spain ➢ Germany (New) ➢ Spain
➢ Germany (New) ➢ France (New) ➢ Germany (New)
➢ France (New) ➢ Bulgaria (New) ➢ Bulgaria (New)

Scenario 1 Scenario 2 Scenario 3

2 GFA Analysis 2023

 Network Optimization
In NO, by studying the new DC locations we
Iteration NO Profit Regional DCs Customers
obtained in GFA, we identified 3 scenarios,
Spain 30 that we think are the best, out of 30
14 59,467,175.451 Germany 134 iterations.
(Scenario 1)
France 30
Germany 128
16 59,421,309.096 France 48
(Scenario 2)
Bulgaria 18
Spain 33
25 58,842,561.484 Germany 143
(Scenario 3)
Bulgaria 18

3 Network Optimization 2023

 France – Germany - Spain
SIM Scenario 1
Profit, Revenue & Costs Inventory Policies Service Level

Profit € 57,579,057.43 Reg. DCs → Min-Max + SS ELT SL %99 Expected SL = %95 (k=1.65)
Revenue € 117,106,675.00
Cen. DC → Order on Demand Closest Dynamic Sourcing
Total Cost € 59,527,617.57
Trans. Cost € 10,788,023.31 Factory → Order on Demand SL %83.1 Min Load Ratio of FTL = 0.9
Carrying Cost € 57,159.63
_ _
Average Daily Available Inventory Lead Time

• Factory Expected LT = 5 Days

• Central DC Chief Executive Officer
• France Trans. Time = Triangular
• Germany
• Spain

_
_

4 Simulation Scenario 1 2023

 France – Germany - Spain
SIM Scenario 1 (With Disruption)

Profit € 57,014,297.73 - 1.0%

Revenue € 117,024,625.00 - 0.1% ELT SL %99.4 Service
Total Cost € 60,010,327.27 0.8%
Level
Trans. Cost € 11,036,419.29 2.3% SL %82.6
Carrying Cost € 57,682.26 0.9%

Average Daily While there is a decrease in revenue due to the closure of

Available Inventory Spain DC in April and May, one of the biggest factors in the
• Factory decrease in profit is the 2.3% increase in logistics costs.
• Central DC
• France It seems that the proximity of other DCs to customers and
• Germany central DC helps to maintain the service level even though the
• Spain profit is going down.
 Bulgaria – France - Germany
SIM Scenario 2
Profit, Revenue & Costs Inventory Policies Service Level

Profit € 56,827,939.22 Regional DCs → RQ Policy ELT SL %95.6 Expected SL = %95 (k=1.65)
Revenue € 116,650,309.00
Cen. DC → Order on Demand Closest Dynamic Sourcing
Total Cost € 59,822,369.78
Trans. Cost € 10,618,532.70 Factory → Order on Demand SL %82.4 Min Load Ratio of FTL = 0.9
Carrying Cost € 56,629.86
_ _
Average Daily Available Inventory Lead Time

• Factory Expected LT = 5 Days

• Central DC Chief Executive Officer
• Bulgaria Trans. Time = Triangular
• France
• Germany

6 _ Simulation Scenario 2 _ 2023

 Bulgaria – France - Germany
SIM Scenario 2 (With Disruption)

Profit € 55,845,422.45 - 1.7%

Revenue € 117,214,102.00 0.5% ELT SL %94.8 Service
Total Cost € 61,368,679.55 2.6%
Level
Trans. Cost € 11,394,260.87 7.3% SL %81.9
Carrying Cost € 57,364.61 1.3%

Average Daily Although there is a small increase in revenue, due to the fact
Available Inventory that Bulgaria DC is located away from the majority of
• Factory customers, which cause a high increase in transportation
• Central DC costs, resulting in a decrease in profit by approximately 1
• Bulgaria million Euros while France DC was closed for 2 months.
• France
• Germany
 Bulgaria – Germany - Spain
SIM Scenario 3
Profit, Revenue & Costs Inventory Policies Service Level

Profit € 56,486,829.91 Regional DCs → RQ Policy ELT SL %95.2 Expected SL = %95 (k=1.65)
Revenue € 117,186,380.00
Cen. DC → Order on Demand Cheapest Dynamic Sourcing
Total Cost € 60,699,550.09
Trans. Cost € 12,224,576.02 Factory → Order on Demand SL %81.7 Min Load Ratio of FTL = 0.9
Carrying Cost € 49,669.58
_ _
Average Daily Available Inventory Lead Time

• Factory Expected LT = 5 Days

• Central DC Chief Executive Officer
• Bulgaria Trans. Time = Triangular
• Germany
• Spain

8 _ Simulation Scenario 3 _ 2023

 Bulgaria – Germany - Spain
SIM Scenario 3 (With Disruption)

Profit € 55,704,738.84 - 1.4%

Revenue € 117,048,910.00 - 0.1% ELT SL %95.6 Service
Total Cost € 61,344,171.16 1.1%
Level
Trans. Cost € 12,698,141.48 3.9% SL %80.9
Carrying Cost € 50,315.55 1.3%

Average Daily Scenario 3 already shows high logistics costs and less profit
Available Inventory since Spain and Bulgaria DCs are located far from the most of
• Factory customers.
• Central DC
• Bulgaria Moreover, the two-month closure of Spain DC causes a more
• Germany increase in transportation costs which results in decrease in
• Spain revenue and profits.
 Conclusion & Recommendations

Based on the results of our SIM studies, we determined that Iterations we achieved in NO have shown that if the company
scenario 1 would be the best decision in terms of profit and consider to distribute products with more regional DCs instead
service level if the company decide to close Belgium DC. of max 3, potentially more profitable, resilient and reliable
Moreover, locating regional DCs close to each other, and scenarios can be obtained.
especially to regions where customers are the majority, allows
both a more balanced distribution of products per DCs and an As a recommendation, if the company managers consider to
increase in profitability by keeping transportation costs serve more customers in the European market, especially in
substantially low. In addition, It also demonstrates the the east. They can increase the company's profitability and
resiliency of the system, with minimal impact on customers in maintain a resilient supply chain system by opening a 4th or
the event of a potential disruption at regional DCs. more distribution centres in the East Europe.

If the results of scenarios 2 and 3 are examined, although In our studies, we observed that although opening a new DC
Bulgaria DC is close to the customers in the east, being away causes extra costs, it mostly allows the supply chain to be
from the majority and central DC both increases the costs and managed more properly, the system to be more resilient and
results in the fact that DC cannot used efficiently enough. increase the overall revenue. All these positive effects also
promote the reputation of the company.

Conclusion &
10 2023
Recommendations
GRAZIE ☺

11