Logistics network design

Logistics network radiation patternLOGISTICS network radiation pattern is concerned with the purpose of the number and invest of warehouses and manufacturing plants, allocation of customer ask, distribution of warehouses to production plants. The best configuration must be able to deliver the goods to the customers at the least cost (commonly used objective) go rewarding the service level needs. In most logistics network design models, the customer demand is exogenous and defined as a consistent criterion for each product. Such a uniform demand value does non take advantage of the possibility that opposite customers possess different sensitivity to delivery depart-time.Logistics network design is a vital strategic decision for Audi. It is very important to allocate the customer demand points to warehouses, and allocate products from warehouses to production plants. As Audi have become more global, there has been a trend towards outsourcing the logistics function to third- party logistics (3PL) firms, so that manufacturing companies can focus their efforts on their core competencies. Thus, 3PL companies must have the capability to design efficient and effective logistics network so as to add value to their clients business. Audi is excellent in this.In Audi Company, we see three new models for logistics network design with special focus on the perspective of 3PL companies. The chief objective of these new models is to increase the effectiveness of the resulting network design and the utilization of facilities in the network.The three models report the following areasLogistics network design with differentiated delivery lead time,Logistics network design with price discount, andConsolidated logistics network design using consolidation hubs.A new perspective of Audi that incorporates into logistics network design are, two factor namely delivery lead time and price discount that are usually not considered. This shows that designing network with differen tiated delivery lead time can reduce the network cost, while the other shows that combining pricing decision and demand management can result in a network design with higher net profits, combines tactical decision for inventory replenishment policy with strategic decision for consolidated network design. These shows by adding consolidation hubs at suitable locations near to the suppliers, we can leverage on concave Audis cost to reduce the overall network cost.Network design and inventory replenishment policy simultaneously our findings provide managerial insights into how 3PL companies can and their results to improve their business. Audi design more effective logistic networks to support their clients and Audi is applicable to the order fulfilment business process and managing suppliers for manufacturers. As every part is made by Audi but work is divided into different department, for example tyre, machine etc are produced in different plant.Audi is designing a network according to demand classes segmented according to their sensitivity to delivery lead time. This shows that potential network cost savings can be achieved by designing a network with segmented customer demand as compared to a network without segmented demand. For the segmented demand case, the short LT demand customers are served from their local warehouse or a nearby warehouse which can satisfy the delivery lead time requirement while the long LT demand customers are served directly from the hub which is located further away. In addition, the model explored the multiple facilities radical method which groups facilities which can serve the same customer location within the short LT requirement. It was shown that multiple facility grouping can reduce the network cost, in particular for networks with lower inventory holding cost and high fixed facility cost.Network Design Key IssuesPick the optimal number, location, and size of warehouses and/or plants bound optimal sourcing strategy-Which pla nt/vendor should produce which product?Determine best distribution channels-Which warehouses should service which customers?Data for Network DesignA listing of all productsLocation of customers, stocking points and sourcesDemand for each product by customer locationTransportation ratesWarehousing costsShipment sizes by productOrder patterns by frequency, size, and season, contentOrder processing costsCustomer service goals