Holding United Confectioners

Optimization of logistics costs on the basis of economic computer model for the holding "United Confectioners"

Project Description


Holding "United Confectioners" - one of the largest confectionery holdings in Europe (comprising 15 companies across Russia, is part of the "guta" group).
More information about the company: www.uniconf.ru

Statement of the Problem

The "United Confectioners" holding includes 15 companies throughout Russia and a branched federal distribution system, so the cost of logistics as one of the key cost drivers, have the greatest potential to increase profitability and optimizing operations of the Holding Company.
Holding’s management set a task to the “ALT” consultants to analyze all aspects of the system of goods and to develop recommendations for optimizing logistics costs.

What we have done

During the project, evidence-based economic model was developed to analyze the existing supply logistics system, which includes all factories and distribution logistics centers, as well as the peculiarities of interaction with different types of customers.
Based on economic modeling consultants have worked for the following possible initiatives to optimize:

  • Modeling of the scale of operations (sales) by range and regions;
  • Optimization of production programs of factories and various options for reallocation of amounts between them, including the effect of seasonality;
  • Optimization of the regional distribution of the range, depending on production volume, capacity distributors and predominant types of clients;
  • Evaluation of alternatives of the geographical location of distribution centers;
  • Evaluation of alternatives of expansion of storage capacity (storage in factories or distribution centers, etc.);
  • Analysis of different methods of delivery (direct, through distribution centers .);
  • Optimization of the delivery costs depending on type of transport;
With the help of the model there was evaluated the existing system of trade flows and there have been worked through various options to optimize it, including evaluation of the potential effects of cost reduction.

Result

According to the results of the project the management of the Holding Company was offered recommendations for optimizing logistics system, which implementation would significantly reduce the cost of maintaining the logistics system, including direct logistics costs, optimize resources and infrastructure investments.

In addition, the company had been given an economic model within which specialists alone could simulate the economy of the distribution logistics with changing various system parameters and to conduct further activities for its optimization.