Developing a framework for determining the optimal replacement strategy for a vehicle fleet of a 3rd Party logistics service provider (LSP), IMPERIAL Distribution

Abstract

This project is centred within the logistics and supply chain industry and is being monitored and supported by IMPERIAL Logistics and Volition Consulting Services, while being completed at IMPERIAL Distribution – a division of IMPERIAL Logistics. The project requires the use of Industrial Engineering techniques to create a framework that can be used by IMPERIAL Distribution, as a logistics service provider (LSP), to determine the most cost-effective fleet replacement policy for a specific client. This framework will need to take many different forms of inputs, while producing an optimal replacement strategy on request of the user. The scope includes the study of vehicle maintenance and size as well as capital outlay and risks. In the end, this framework aims to meet IMPERIAL Distribution’s client requirements as effectively as possible, while keeping the associated outbound logistics cost to a minimum. This project will assist IMPERIAL Distribution in acquiring new contracts by means of tenders and by optimizing the fleets of current clients in terms of their replacement policy. This is important to them in the competitive industry of supply chain and logistics seeing as they will be able to provide an improved, more streamlined solution to their ever-increasing client base, while saving themselves money along the way. If implemented successfully, the proposed framework will result in potential savings by means of a decrease in variable cost per kilometre. This will remove volatility in addition to receiving better recovery on the vehicles within the IMPERIAL Distribution fleet.