The Modelling and Optimisation of the Vector Logistics Distribution Network

Abstract

Supply chain networks are constantly facing numerous challenges and need to find solutions to overcome them. It needs to ensure that it remains competitive and generates a profit whilst meeting company and customer requirements. Vector Logistics is a 3PL service provider that is experiencing complexity within its distribution network. This paper explores the complexity rationale and literature by looking at the challenges faced by supply chains. The paper goes on to discuss a solution in the form of supply chain network design with the aid of an evaluation framework. In order to apply this tool correctly, existing frameworks and optimisation tools are investigated. The paper then goes onto look at the generation of conceptual solutions. It is determined, with the use of a decision matrix, that Supply Chain Guru would be the most suitable software to perform this network optimisation. The Vector Logistics PSD network is then modelled, scenarios determined and a framework is established to evaluate the outputs that are generated by the scenarios. The outputs include aspects such as logistical costs, throughput rates and the flow of units. Due to confidentiality reasons, index systems, and not the actual values, have been used to compare values from the different scenarios. The framework is applied to the results obtained and it is established that the best possible solution for Vector Logistics is to move to a distribution network that has 5 hubs and cross docks. This solution will result in decreasing the network complexity, maximised profits