Location Planning and Location Optimisation
Fraunhofer Institute for Material Flow and Logistics
- © Fotolia
All logistic sites in place?
All transport networks are based on logistic locations as interface between customer and production on the one hand and main operation on the other hand. Therefore at the question of whether existing stores and depots are matching in number and location should be clarified at the beginning.
What use is the best logistics network if, for instance, long delivery routes must be put into place as a result of a site’s incorrect number or location? The collection and distribution routes in particular constitute of a major part of regular costs of a transport network. Therefore the appropriate location of depots with the appropriate connection to the customer is of great importance.
In the majority of cases not all existing locations are available. Some locations are set due to existing customer relationships or long-term real estate agreements. In such cases these fixed locations are taken into account for optimisation calculations and it is to be identified how many and which supplementary locations are necessary.
Even during the first selection process of possible locations, specific framework conditions can be taken into account: if for instance the number of depots is to be reduced though only existing locations are meant to be used instead of new ones being created, then only the existing depots would be taken into consideration from which the optimal subset will be determined as future depot locations.
Real Estate Prices
As part of the optimisation of locations it is possible to consider not only the minimising of transport costs. If necessary, other cost values like land and real estate costs or corresponding cost functions (as well as operating costs) can also be taken into account for the optimisation.
Key location factors
According to client specifications, soft location factors such as available manpower and qualification, funding opportunity and building regulations can also be integrated into the location optimisation.
Not only the appropriate number and location of depots is important for transport costs within short distances but also the appropriate allocation to existing and future clients. As part of location optimisation, the allocation of regions will be algorithmically solved. Though due to specific framework conditions, it can be useful to perform the calculation separately in order to investigate and optimise the allocation of existing locations. Quick customer accessibility may be given priority over short driving distances or some individual depots get a smaller catchment area due to their prevailing low handling capacity. Our working process can take this and other restrictions into account.
Examination including Route Planning
Out of necessity, the locations are determined by using an analytical model of which real details of the process are abstracted. Fraunhofer IML however is able to compare and verify the different scenarios with regard to location in terms of practical suitability by powerful algorithms for route planning. Route planning is not used for disposition but as a strategic planning method.
Realistic delivery routes are created in the areas of the depot to get concrete job data relating to the past for the different scenarios of location. This leads to an exact evaluation of delivery costs and increases the quality of already developed solutions.
Through numerous consulting projects for logistics service providers, Fraunhofer IML provides specialised knowledge of market structures and developments catering to a range of services and customer requirements.