The Pyaterochka retail chain has developed and implemented a new tactical supply chain planning model with the support of Korus Consulting Group of Companies. The system allows making decisions on the efficient operation of the store-distribution center (DC) link, taking into account tariff forecasts, assortment matrices of stores and the capacity of warehouses to accommodate the assortment.
Each region of Russia has its own set of local suppliers and differs in assortment. The new model makes it possible to distribute the flow of goods on the existing logistics infrastructure in such a way as to minimize the cost of warehousing and transport services for supplying stores. As a result of the work of the optimization module, Pyaterochka’s analysts receive information about which assortment should be stored at which distribution center, how inter-warehouse movements and supply chains are arranged. The expected impact on reducing the cost of transport logistics is up to 25% for stores whose supply is switched to other DCs (or about 1% of the total transport costs).
The optimal plan for the distribution of goods across DCs and efficient supply chains are regularly reviewed and adjusted depending on seasonal fluctuations and help to smoothly pass periods of unstable, rush demand, which was, for example, in March-April 2022.
The new model complements the existing optimization tools; it was developed jointly by a team of experts from the Russian company Korus Consulting and Pyaterochka based on international technologies. In addition to the tactical model, Pyaterochka also applies a model for the strategic planning horizon (3-10 years), which allows you to optimize the logistics infrastructure – make decisions on opening new logistics centers, reconstructing or closing old facilities, as well as improving efficiency and reducing costs in the whole supply chain across the country. Using a strategic planning model, cost-effectiveness was calculated for 11 new distribution centers over the past 1.5 years. For each region, the reduction in the total cost of transport and storage is 2-5%.
The planning model for the strategic horizon has been improved, the speed of data processing and the search for the optimal solution has increased. Now you can get the result in 1.5-3 hours, which allows you to analyze a large number of scenarios and development options depending on different values of the initial assumptions, check the sensitivity of the result to changes in tariffs, sales forecast and other parameters. As part of the pilot, together with consultants from Korus Consulting Group, scenarios for the development of supply chains and logistics infrastructure for the Volga region were calculated, which made it possible to find effective solutions and prepare economic feasibility studies for new investment projects in logistics.
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“Especially now it is important for us to make decisions quickly and based on high-quality data. This applies not only to business processes, but also to the development of internal competencies. Therefore, we turned to the experience of our long-term partner, Korus Consulting, and successfully implemented a pilot project, as a result of which we received answers to questions on the development of supply chains in one of the regions and a new tool that allows us to respond to current business requests. Our team of analysts has gained valuable experience in creating models, analyzing and visualizing the results, which will definitely be useful to us for other projects, ”said Kirill Arkhipovhead of the network optimization department of the Pyaterochka retail chain.
“Over time, any solutions become obsolete: the number of tasks is growing, and systems need to be updated. Our team audited the existing strategic model at Pyaterochka and developed a new tactical one: it has a higher level of product detail, which allows it to take into account differences in the assortment matrices of different regions. We are pleased that the retailer continues to develop its Supply Chain Modeling Center of Excellence and look forward to participating in its further expansion,” said Dmitry KrasilovHead of Supply Chain Planning Department, Korus Consulting Group of Companies.