Modelling logistics behaviour in the FMCG industry

Abstract

Paper presented at the 33rd Annual Southern African Transport Conference 7-10 July 2014 "Leading Transport into the Future", CSIR International Convention Centre, Pretoria, South Africa.

The state-of-practice in commercial vehicle modelling often neglects the sophisticated behaviour found between stakeholders in a supply chain and the impact thereof on the ultimate vehicle flow. The state-of-the-art in commercial vehicle modelling needs to capture this behaviour to accurately predict the influence of changes in the supply chain. In this paper, we discuss how changes in the behaviour of the receiver influence the behaviour of the shipper and carrier, while focussing on a supply chain in the Fast Moving Consumer Goods (FMCG) industry. Retailers in the FMCG industry typically order in large quantities with high stock turnover rates. Utilising an order policy, they place orders with suppliers, either replenishing stock to a predetermined level every certain number of days or once a certain re-order point is reached. The supplier (the shipper and carrier) utilises route optimisation and scheduling of deliveries to cater for the demand of its customers. We show how the behaviour of these stakeholders can be captured in an agent-based modelling environment and how the behaviour of the shipper and carrier is sensitive for changes in the order policies of its customers.