H. von Gimborn GmbH faced the task of implementing a fundamental optimization of its logistical system because of altered environmental factors. In order to create a quantifiable basis for the decision-making process that takes into account all aspects of complex logistical processes, the logistical consulting team from CPL-Service GmbH involved in this endeavor used database-supported simulations. The team used the INCOME Suite for this task. In only four weeks, they were able to develop a logistical concept that was mature enough for implementation. Special attention was given here to the analysis and evaluation of strategic alternatives such as outsourcing vs. in-house logistics.
1. Initial situation
H. von Gimborn GmbH is a German market leader in the area of specialty pet products. Along with the specialties that they produce themselves, they also sell procured accessories through a central distribution warehouse throughout Europe. Because of changing market situations, H. von Gimborn GmbH decided to revamp its existing logistical concept so that it would be able to react more flexibly to customer wishes in a quickly changing market. Technical support for this comprehensive project was provided to H. von Gimborn by the logistics team from CPL-Service GmbH. The working method of the CPL consulting team consisted of using the technique of process modeling and simulation along with traditional analysis methods. The INCOME Suite was utilized along with their Process Modeler and Simulator components.
2. Procedure
In the first step, it was determined together with the client that along with an internal optimization of the processes, consideration should also be given to outsourcing the logistical processes to a service provider. Here it was decided to depict the processes in a simulation model and to simulate and evaluate the two different scenarios. For this purpose, the actual processes were incorporated in the distribution warehouse onsite. The preliminary processes, from the receipt of goods to delivery, were modeled along with their activities in a superordinate Petri net in order to graphically depict the order and relationships of individual activities. Then the individual activities, e.g. commissioning in sub-networks, were refined until the complete warehouse and delivery process was modeled in detailed. The INCOME Process Modeler was used here to save the logistical relationships in a database. The advantage of this procedure was that both the entire flow as well as the sub-areas remained transparent and the numerous complex, multi-level processes were depicted in relation to each other and thus they remained controllable. Afterwards, the comprehensive data was evaluated to allocate costs, times, amounts, capacities, resources and respective business conditions to the individual processes.
The weaknesses recognized in the actual analysis and the technical evaluation of the weakness analysis from the simulation of the actual state helped to give insight into the potential for optimization within the company. This was incorporated into the already-existing network as a basis for the optimized processes. The knowledge taken from this was then implemented step-by-step under continuing validation through simulation in an optimal process. As an alternative, the "outsourcing" variant was simulated in another model.
In parallel, specifications for the requirements of an outsourcing partner were developed. The individual points could be derived from the model using its activities and refined sub-networks. It served as a basis for creating the range of services for selected service providers.
Both scenarios could then be evaluated and compared.
3. Result
After evaluation of the individual scenarios, it was quickly recognized that the optimized in-house solution option represented the most cost-effective and flexible variant under the given conditions. The simulation results were used along with the unquantifiable factors as the foundation for decision-making regarding costs and held considerable weight during the decision-making process.
The INCOME process model will now serve as a reference and guide for the implementation of the optimization. Among others, the assortment will now be oriented to the fast/slow turnaround principle and the commissioning paths will be optimized using a new commissioning system and the end control effort minimized.
4. Summary
The methodology of the database-supported system using INCOME tools to help with the decision-making process proved itself in actual practice. It provided the opportunity to depict different scenarios of complex processes, to simulate with minimal effort and to make comparisons to each other under various environmental conditions. Erroneous decisions were avoided using less time and effort since all general conditions even multi-layered systems were taken into consideration.
Another advantage is the fact that the model that was created can continue to be used as a reference. This allows you to evaluate ideas for improvement using easily changed parameters. During actual operation, this would be full of risks and could only be tested with interruptions. New types of order situations can be simulated so that you will know any required measures to be taken before you start.
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