New facility location and capacity planning is very important for growing companies. Being a strategic planning decision, it can influence company’s ability to serve customers in different geography for years. Therefore, such decision must be planned with proper consideration of long term interest of corporation along with current market understanding.
ORMAE provides experise solutions in choosing optimal warehouse location in a way to minimize total routing cost for delivering to customers along with total manpower cost needed at the warehouse. Some of the inventory might be reassigned from existing warehouses to new warehouse along with bringing additional inventory in new warehouse.
Challenges, Solution and Business Impact
1. Continuous market fluctuations along with seasonal impact makes facility location decision quite challenging
2. Investment cost along with impact on running cost and it’s influence on delivery time to customer with not fully quantifiable financial impact makes it difficult.
ORMAE studied existing data for an ecommerce customer around the geography of expected warehouse location. Studying such data led to strategic location considerations to address customer market strategically. For those locations, expected investment cost were calculated. Then using optimization model, impact of investment and operational cost were studied to find best locations. Out of final set of locations, multiple what-if scenarios were studied to identify best warehouse location
Business Impact: This process not only resulted in strategic facility location but it gave insight to planners how new location will serve market along with impact on it’s operational cost in different situations.
Choosing optimal warehouse location in a way to minimize total routing cost for delivering to customers
Inventory reassigned from existing warehouses to new warehouse along with bringing additional inventory in new warehouse
Operational constraints satisfaction on distance and times using Data science
Strategic facility location identification
Using optimization model, impact of investment and operational cost were studied to find best locations