Supply chain modelling using world leading software

We helped the UK distributor of an overseas automotive manufacturer to develop a logistics strategy for serving the after-market. Spare parts for cars were being distributed to dealerships throughout the UK. Every dealer received a stock order every two weeks and stock orders were delivered using a dedicated fleet of articulated vehicles. A separate VOR service was in place and a premium price was charged. Dealers could order up until 16:00 for next day delivery, normally during the morning. Despite the premium, 97% of dealers were using the VOR service every day. We worked with the distributor's team to investigate the effects of an improved delivery service.

The first stage was to set up a model of the existing transport operations in Paragon, the route planning system. During this part of the project, it was found that the stock order deliveries could be performed with fewer articulated vehicles but the VOR delivery fleet was being well utilised. Various options to increase the level of service to dealers were then investigated with the client assessing the impact on distribution centre and dealer costs.

The conclusion of the study was that stock orders and VOR orders should be delivered using the same fleet. No limit would be placed on the frequency of delivery of stock orders. However, to ensure that the distribution centre costs incurred assembling them were not excessive, they would have to exceed a minimum value and 48 hours notice would be required. VOR service would continue without alteration. Calculations indicated that the small increase in transport costs resulting from this change would be greatly exceeded by the reduction in inventory costs for dealers. Furthermore, working capital would be released in the dealerships.