Case Study: Assessing the
delivery network required for home deliveries
A contract logistics company wanted to assess the warehouse and
depots that would be required as a retailer rolled out a home delivery
service.
Data on existing and potential deliveries was provided and a picture of
the delivery profile by post code sector was compiled using demographic
characteristics. Paragon was used to calculate the vehicle requirements
for a nominated time service that included evening deliveries. Delivery
costs by geographic area were then calculated for the base year and
extrapolated to year 5 to form the basis for network planning.
We then used the CAPS Logistics Supply Chain Designer to assess delivery
networks and channels. The model was given a large choice of candidate
sites that could act as a National Distribution Centre, Regional
Distribution Centres or cross dock depots. The model was then allowed to
choose the sites to use and the optimal flow of goods to customers. We
firstly optimised the network based on the year 5 profile, then
optimised each year individually to obtain the migration path. In
parallel with the distribution centre option, we also developed a
solution based on the retailer's stores. The store option was less
costly, but as stores had a limited capacity for handling deliveries it
was only practical to use them for a limited period of time.
The project provided a clear roadmap for the retailer and distribution
company, indicating the distribution infrastructure required year by
year and illustrating the cost of the home delivery service.
