Development of Logistics network model for low volume customer orders in FMCG business
- Share of logistics cost in percentage of overall revenue in Fast Moving Consumer Industry is 8% and this share is increasing" (s. Handfield, R.; Straube, F.; Pfohl, H.-Chr.; Wieland, A. 2013, p. 19). Hence to take advantage in market all companies are trying to reduce their logistics cost. Outbound customer transportation holds the highest share in logistics cost" (s. T. Seiler 2012, p. 25). In transportation cost, when customer orders in small quantity, the cost incurred will be inappropriate to the volume delivered. This thesis work will adopt and further develop the known best logistics best practices as two models to the low volume customer orders conditions in Fast Moving Consumer goods (FMCG) market. First model will consider this problem has an unique solution and treated only by applying a single logistics strategy neglecting other strategies for all low volume orders. Hence the approach will be y = F(x,z), where x is the logistic strategy attribute and z is the total number of customers. To reduce complexity, this thesis will only consider pooling delivery method by a groupage carrier. In the second model, combination of three logistics strategies such as milk run, crossdocking and groupage delivery method is considered . Hence the approach in second model will be y = F(a,m) + F(b,n) + F(x,o) where z= m+n+o, whereas m, n and o are the number of customers delivered by milk run, cross-docking and groupage methods respectively. Combining and comparing the different models based on transportation cost and CO2 emissions leads to the development of a complete model, which is the final result of this thesis work.
Literature:
1) Handfield, R.; Straube, F.; Pfohl, H.-Chr.; Wieland, A.: Trends and Strategies in Logistics and Supply Chain Management - Embracing Global Logistics Complexity to Drive Market Advantage, DVV Media Group GmbH, Hamburg 2013.
2) T. Seiler: Operative Transportation Planning: Solutions in Customer Goods Supply Chains, Contributions to Management Science, Physica publishing House, Heidelberg 2012.
