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COST2SERV Network Strategy

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COST2SERV

COST2SERV enables organisations with complex national and international distribution networks to reduce their total cost-to-serve, maximise margin and increase service levels. It is used to formulate network infrastructure and supply strategies by a variety of industries including oil and gas companies, high street retailers, building supplies and FMCG. All companies dealing with numerous product sourcing and distribution options, needing to identify the most cost-effective method of fulfilling demand.

In determining infrastructure strategy, COST2SERV Network Strategy enables companies to review the number, location and capacities of their depots, in order to compare these with current and forecast demand in terms of volumes and geography. In addition, the system can identify the network constraints that have the most potential to reduce the total operating cost, so providing a powerful means of prioritising development objectives and supporting capital investment cases.

Companies use COST2SERV Network Strategy to identify the least cost source and supply route for each demand point, to determine primary modes of distribution, allocate demand points to depots, calculate resource requirements and to quantify the cost-to-serve makeup for each customer.

The system can also indicate the additional costs that might be incurred by adopting a non-optimal solution, such as serving a demand point from the ‘next best’ depot. Where product sourcing exchange agreements exist, prevalent in the oil and gas industries, managers can analyse their cost-effectiveness and structure, empowering the contract negotiation process.

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Benefits:

  • Reduced Supply Chain Costs: Identifies the least cost means of servicing demand within the constraints of the network and provides a detailed comparison with existing costs as the basis for an actionable plan to realise savings.
  • Detailed Cost options: You can produce a number of options at various levels of cost to the business such as by customer, by product line or by supply route. This allows the least cost options to be assessed and provides a true cost-to-serve.
  • Risk Free Environment: Test ideas and ‘What if?’ scenarios without any effect on the day-to-day business and assist in ensuring the most risk-free approaches to change are implemented.
  • Ongoing Activity Improvements: Quantify the cost benefits of relaxing any of the network’s constraints, enabling management to prioritise operational developments or make the case for further capital investment.
  • The Impact of Change Quantified: Assess the impact of changes in demand, product availability, depot numbers, locations and capacities to the network and the impact these changes have on the cost-to-serve.
  • Maximised Returns from Exchange Agreements: COST2SERV Network Strategy utilises exchange agreements, within their contractual constraints, to minimise costs. It also quantifies the changes in the constraints that would further reduce costs as an input into contract negotiation.
  • Simplifying Complexity: COST2SERV works with the most complex of logistics inter-dependencies, which are normally beyond the scope of conventional software.
  • Speed of Solutions: The ultra-fast optimization system delivers fully validated information rapidly replacing hours of manual spreadsheet work.
  • Communication: Optimisation results are presented in a clear KPI dashboard and readily exported to other formats, including detailed Excel reports. Clear communication generates confidence in the proposed model or a basis for further negotiation, pricing and investment.

Features:

  • Information sets, are pre-configured into COST2SERV Network Strategy; these relate to the supply chain operation defining all of the supply constraints, demand requirements and costs. The optimisation engine then takes these and, using mathematical programming techniques, identifies the least cost means of satisfying the stated demand.
  • Reporting, the system is designed to produce a variety of report formats meeting the specifications of the individual user. Different scenarios can be saved as separate projects and their results compared across the key KPIs.
  • Windows, COST2SERV Network Strategy runs on a standard Windows PC.