Regional Logistics Network Optimisation

The operations director knew the company's logistics cost had climbed from 8.2% to 11.1% of revenue over two years. What he couldn't tell the CFO, because he genuinely didn't know, was why. The 14 distribution points across Maharashtra and Gujarat had been accumulated over a decade of growth and two small acquisitions. No two of them had been designed to work together. Stock levels were tracked in separate spreadsheets. Transit times were estimated, not measured. When the CFO asked why logistics costs were up, the honest answer was: we don't know.

We built a network model using two years of transaction data, the kind of model the operations team had wanted to build for 18 months but had never found time to do properly. The output was uncomfortable: four of the 14 distribution points were handling less than 8% of combined volume while sitting on fixed costs that were eating the margin. Two strategically located hubs replaced them. Carrier contracts were renegotiated using real volume data rather than the informal arrangements that had been in place for years. A basic S&OP cadence was introduced, not sophisticated, but consistent.