The optimization of distribution network: A case study of KUEHNE + NAGEL Viet Nam

Abstract

The location of distribution center and the vehicle routing from that location is an important strategic decision in distribution network design, in general as it relates to service level quality, profitability and productivity of the company. There has been extensive studying performed on distribution location models which required the use of compound algorithms and assumptions that make use of these models difficult in practice for the current distribution network. The purposes of studying focusing on the design of domestic distribution network play an important role by Kuehne+Nagel. Further, it aims to propose the solution of the distribution center allocation and the distribution networks planning by the change of current model at the logistics service provider Kuehne+Nagel Vietnam. A deterministic location-allocation model and network planning by using the vehicle routing algorithm is designed by using an application tool. Data analyses with a case study of FMCG’s company that provide an opportunity that evaluate the results of the application tool and the potential business impacts. The results in a more optimal distribution network solution. The potential location proved the reduction of transportation cost in a network design from the current model and also provided insight into considering volume in location analysis as it can serve as a magnifier of business impact. iv Keywords: Distribution Network design, Optimization cost, customer satisfaction, facility location problem, vechicle routing problem.