EURO 2024 Copenhagen
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2748. Direct Dispatch and Order Fulfillment Models in Retail Supply Chains

Invited abstract in session MD-50: Warehouse Management, stream Retail Operations.

Monday, 14:30-16:00
Room: M2 (building: 101)

Authors (first author is the speaker)

1. Narayan Rangaraj
Industrial Engineering and Operations Research, Indian Institute of Technology Bombay
2. Geetha Bhargavi Katikala
Godrej Capital Ltd
3. Tilakraj Singh
Unilever

Abstract

We explore the potential of implementing a dual supply chain system to replace a conventional one driven by a typical large Consumer Packaged Goods (CPG) firm. The dual supply chain would deliver finished products both through distribution centers and through direct dispatch to retailers. Demand information and the cost structure from the company's production facilities and existing supply chain were analyzed to build and validate a model for the dual supply chain within planning constraints.

The objective is to reduce operating costs by using the opportunity for direct dispatch, considering network restrictions. Direct dispatch possibilities were identified, based on customer segmentation, across time and across locations. Aggregation is possible both temporally (combining orders over multiple days, subject to inventory and service level constraints) and spatially (combining orders at nearby locations, subject to vehicle movement constraints). Heuristic approaches and exact optimization models were applied. The detailed example considers 243 customers (retailers) of a plant of the CPG firm. Of these, 24 feasible direct dispatch customers were identified, yielding a Direct Dispatch Opportunity Rate of 14.41% for the plant resulting in cost reduction. The model is extendable to multi factory situations, and leads to interesting modeling issues in fixed cost allocation and consideration of different aspects of service in retail supply chains.

Keywords

Status: accepted

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