How to optimize your network by merging depots? Demonstration with a specific case study
In a tight logistics market where profitability is difficult to achieve, optimizing the delivery network is crucial to reduce costs. An efficient strategy involves reducing the number of depots while maintaining adequate coverage of the territory through depot merging.
Yet, making such a decision is very difficult without accurate and reliable data on which to rely. The choice is even more important because the short and long term impacts on daily operations are very complicated to anticipate.
Here is a practical case study where the pooling of depots becomes a real opportunity for a parcel delivery company to reduce its costs as well as the number of kilometers travelled.
Scope of Analysis:
- Activity: B2B and B2C parcel delivery
- 2 depots to deliver parcels in Toulouse and its surroundings (France)
- 82 routes per day on average carried out by 82 drivers, equally split between the 2 depots
- 6,081 daily delivery points on average
A Regional Operations Manager is facing a situation where his parcel delivery company has recently grown externally by integrating a competitor into its network. This competitor had its own depot that covered the Toulouse area.
There are now two depots to handle parcel deliveries within Toulouse and its surroundings, one in the North and one in the South of the city. The territory has been split between the depots but it is expensive to use two in the same area. Indeed, the cost structure is doubled!
How can the network be optimized? Is a better dispatch of the territory possible? Can he keep only one depot?
helps regional operations managers to sectorize their territory and provides precise data that will enable them to better optimize their operations. Based on historical data, and taking into account operational constraints, the will recommend the optimal organization of the territory for any geographic area.
How to take advantage of this opportunity with Kardinal's solution?
Analysis of the current sectorization
Thanks to Kardinal’s solution, the regional operations manager can visualize the dispatch of his territory and have an overall view of costs and performance.
This sectorization shows that 82 routes are currently organized to deliver all the parcels for a total of 12,108 kilometers travelled.
Let us now discover the dispatch of the territory between the two depots:
41 routes & 4,339 km travelled for North Toulouse depot
41 routes & 7,769 km travelled for South Toulouse depot
Each depot operates the same number of routes (represented by the black lines) but the one in the South covers a larger area.