Certas Energy Saves – with COST2SERV
January 5, 2016
A leading distributor of fuels and lubricants optimises its distribution network by consolidating depots after 10 years’ of growth, using the leading network strategy tool from Cirrus Logistics
Cirrus Logistics, leaders in decision support tools for the supply chain industry, has been working with Certas Energy, one of the largest distributors of fuels and lubricants in Britain, to optimise its growing supply chain network using its COST2SERV Network Strategy tool. The ongoing project is expected to result in impressive cost savings by optimising its whole distribution network, selecting the optimum source of supply and allocating customers to their best depot.
Certas Energy supplies domestic, commercial, agricultural and industrial customers throughout Britain. Over the last 10 years, the company has grown organically and rapidly through acquisition, including that of Total Butler in 2012. As such, its network of depots has also expanded and the company found that it had multiple sites serving each region; it was time for it to review its entire supply chain strategy.
With around 100 depots and half a million customers to serve, its delivery trucks range from very small (‘baby’) tankers to artics. The company ships 10 different product fuel types, with some products only available at certain depots making the allocation decision more complex; taking a strategic view of its operation, Certas Energy wanted to ensure that it remained cost-effective and that it was using the optimum network to supply goods, while also providing product on time and to its agreed service levels.
Certas Energy invested in the COST2SERV software developed by Cirrus Logistics in order to answer these questions. The Certas Energy team worked with Cirrus Logistics experts to create a model of the entire network as it operated at the time; validating results against base-case data by fixing customers to their current delivery depots & ensuring that the total calculated costs matched the actuals. “Using this method meant that we were able to bring our models within two per cent of our actual costs of running the business today, which gave us confidence in the tools and our model moving forward,” commented David Hauff, head of logistics services at Certas Energy.
Using a ‘clustering’ algorithm, developed by Cirrus Logistics, clusters of customers are automatically generated to keep the problem size and solution time as low as possible. In addition, the company used the COST2SERV multi-drop algorithm which ensures that the right level of cost was allocated to each customer delivery, dependent on their average load-size and the availability of neighbours to deliver to.
“Through our strategic review, we found that we could make better use of our available network,” Hauff continued. “Based on the available primary sources and depot network serving our many customers, we were able to find a solution that gave us the optimum cost to serve, incorporating both our primary and secondary delivery costs. As part of the DCC group, we had already worked with Cirrus Logistics and used COST2SERV in the FLOGAS business. Upon investigation, we once again found that COST2SERV provided the best solution for our needs and, working alongside the Cirrus Logistics team, one that would grow and adapt with our business.”
Certas Energy prides itself on creating a team of highly trained and experienced professionals. As such, the company has purchased a multi-user licence from Cirrus Logistics and is training a team of specialists who will continuously review and develop a speedy process to run ‘What-if’ scenarios with COST2SERV, constantly keeping the network allocation decisions under review.