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Empty Container Placement Optimization
Objective
Design a solution that alleviates the challenges associated with container placements, namely
- Reduce transportation cost of repositioning
- Maximize system revenue generating potential
- Determine inventory levels for strategic hubs
- Balance buy/lease new vs. repair/maintenance
Industry: Healthcare-Wholesaler
Services: Technology Innovation
Technology: Mathematical Optimization
Reduction of
10%
in average placement transportation costs
Reduction of
33%
in the number of daily Cocoon placement moves for the weekdays
Reduction of
25%
in overall operating cost
Our Client
Is a Fortune 100 global healthcare wholesaler and one of the largest drug distributor in the U.S., supplying a wide range of pharmaceuticals, as well as medical supplies and equipment.
Challenge
Empty container repositioning is one of the most critical issues facing the supply chain, due to the unbalanced nature of import-export traffic. Shortfall of containers at origins is detrimental to logistics providers. The cost to return containers, service/ maintenance non-availability of existing containers, repurposing different container sizes or acquiring new containers to serve revenue opportunities are among the tradeoffs to be considered in the empty container repositioning puzzle.
Approach
A comprehensive Advanced Analytics solution that:
- Leverages a comprehensive repository of relevant internal and external data
- Improved visibility into expected demand
- Optimized containers repositioning based on the forecasted demands
Outcomes
- Automated the inefficient and labor-intensive repositioning of containers
- Designed opportunistic container inventory policies at strategic hubs, to minimize the need for intercontinental container repositioning
- Maximized payload utilization of containers
- Increased revenue based on eliminating missed opportunity due to container limitations
- Improved customer satisfaction and loyalty due to fewer late delivery incidents
Impact
- ~ 33%+ reduction in the number of daily Cocoon placement moves for the weekdays
- 10%+ reduction in average placement transportation costs
- Multiplicative effect of the reduced placement moves and lower transportation costs, results in a compelling overall operating cost reduction of 25%
- Increased container utilization and revenue potential due to better supply vs. demand visibility
- Recognized inventory policies at strategic hubs to minimize the need for cross-continental transportation
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