Multi-depot distribution planning at Nabuurs

The assessment of efficiencies in complex multi-depot networks

In recent years, the distribution networks of many carriers have grown from a single-depot (SD) network to a complex and dynamic multi-depot (MD) network. Nabuurs is one of the very few carriers that implemented an automated so-called MD planning as one central planning task throughout their organization. Under a SD setting, the deliveries from each depot are planned individually, and drivers return to the starting depot to pick-up a new order. With MD planning, the deliveries from multiple depots can be planned simultaneously, combining all resources and depots efficiently. This allows drivers to go to the nearest DC to pick up a new order. However, it turns the distribution planning into a more complex task.
Nabuurs required clear performance measurements and required more insight into the quantitative factors (e.g. time or KMs travelled) as well as qualitative factors (e.g. flexibility and availability of drivers). This is key during operations, but also during tenders and quotations. These challenges initiated the master thesis project of Marc Close. Many recommendations of Close were followed-up, leading to two important managerial decisions and impressive improvements, both in terms of distribution network efficiency as well as in terms of cost reductions.

Key terms
Planning, Vehicle Routing Problems, Multi-Depot networks, Transport and Distribution, Operational Planning, Tactical Planning.

Nabuurs B.V.
Nabuurs is one of the largest family businesses in the logistics sector in The Netherlands. Nabuurs develops supply chain concepts, especially for the Fast Moving Consumer Goods sector. Nabuurs focuses on the best route for the products of the customers in terms of cost, service and sustainability. Clients are for example H.J. Heinz, FrieslandCampina, SCA Hygiene Products and Refresco.

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Trends
In today’s supply chains, many manufacturers have outsourced their logistics activities to Logistics Service Providers (LSPs, or carriers). The rationale is simple: “When carriers exploit large networks of transportation assets, they obtain economies of scale, and perform logistics activities more efficiently. Meanwhile the manufacturer can focus on its core business”. Henceforth, the logistics services business is a highly competitive business with many competitors, large investments and low profit margins. It is no surprise that these networks of assets have become extremely complex1. Meanwhile, there are still plenty of inefficiencies in national and international chains. It seems that carriers are less and less able to control these complexities, and it has become increasingly difficult to distribute efficiently. How should carriers approach these challenges?
Nabuurs B.V. is a major logistics service provider in the Netherlands that, prior to its competitors, abandoned the traditional distribution planning methods and implemented a fundamental new planning structure. The Eindhoven University of Technology investigated the impact of this decision and helped improving the visibility of the planning decisions. This ESCF best practice illustrates the efforts at Nabuurs to stay ahead of the competition. First, let’s take a look at the distribution planning challenge itself.

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Key terms: 
Transport planning
Routing
Multi-depot networks
Network design

About ESCF

The European Supply Chain Forum (ESCF) is the premier Operations and Supply Chain Competence Center in Europe. We connect internationally ambitious companies with a focus on long-term partnerships. The ESCF offers an excellent opportunity to share problems and solutions in the area of Operations and Supply Chain Management. Members are able to share their thoughts with and learn from other multinational companies. We provide a global, interactive platform and facilitate joint projects and research. ESCF excels in SCM talent development and life-long learning.
  

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Target industry sector

  • Process industry (chemical and other)
  • Pharmaceutical industry / Health Care
  • Capital goods industry, especially service parts logistics
  • Retail & Internet / E-commerce
  • Consumer packaged goods
  • Mass assembly
  • High-tech (consumer electronics, semiconductors, contract manufacturing, communications)
  • Logistics service providers

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