Cost Optimization for Bulk Cement Distribution Reallocation  

Oleh:

Pengrungruangwong, Worapong ; Thubmak, Preecha ; Virachanang, Vipaporn

Jenis: Article from Proceeding
Dalam koleksi: 12th ANQ Congress in Singapore, 5-8 Agustus 2014, page 1-11.
Topik: Supply Chain Management & Logistics; Bulk Cement product; Distribution Center Reallocation; Linear programming optimization; Failure Modes and Effect Analysis (FMEA)
Fulltext: BP1-1.3-P0372.pdf (2.08MB)

Isi artikel

For decades, SCG’s bulk cement in central region of Thailand was distributed by 2 transportation models: direct and multimodal transport. The multi-modal bares double handling costs and requires a distribution center (DC) but provides faster speed to market and higher truck utilization. Hence, the multi-modal was used for the highly competitive areas. However, the State Railway of Thailand terminated of the use of rail-mode DC. Without the DC, our customer would loss the market share due to inability to provide the same-day delivery at the same cost or due to the spike in the transportation cost. To help our customer secure its sales territory, a new distribution model from SCG Logistics is required. Our objectives are not only serving the end users at the same service level with lower costs, but also utilizing our existing facilities so as to minimize time and financial investment. As well as investigation on logistics technology, various tools have been applied to find the solution such as Pareto diagram, FMEA, and Linear programming optimization. As a result, by expanding capacity at the closed-lighter-mode DC, together with reallocating service areas of the cement origins, would maintain the service level at lower costs. Also, the truck carriers could retain their truck utilization and revenue. At the full-scaled implementation, the cost saving is expected to be 3.2 million Baht per month, 5% of the existing costs. These convincing win-win-win results encourage us to actively do continuous improvements for further strengthening competitiveness of our business and customer supply chain

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