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April 24, 2014 – Presented by Richard Langer, Quetica, LLC

Effective Supply Chain Network Management, Optimization and Design 4 th Annual Government Transportation Forum. April 24, 2014 – Presented by Richard Langer, Quetica, LLC. Agenda. Introduction to Demand-Based N etwork D esign and Optimization Network D esign and O ptimization Example

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April 24, 2014 – Presented by Richard Langer, Quetica, LLC

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  1. Effective Supply Chain Network Management, Optimization and Design4th Annual Government Transportation Forum April 24, 2014 – Presented by Richard Langer, Quetica, LLC

  2. Agenda • Introduction to Demand-Based Network Design and Optimization • Network Design and Optimization Example • Benefits for Federal Agencies • Questions & Answers Confidential

  3. What is Demand-Based Network Design and Optimization? Confidential

  4. Opportunity for Agencies • Supply chain network optimization typically delivers 15%+ savings to your annual costs via • Optimized product distribution approach • Strategic locations for facilities such as distribution centers and cross-doc operations • Leveraging dedicated fleets for high volume lanes • Ideal modal selections based on availability, costs, and delivery time requirements, leveraging lower cost modes such as TL, Intermodal, and Rail Confidential

  5. Network Optimization Approach Confidential

  6. Approach Overview Confidential

  7. Input Data • Product • Products that organizations deliver to their customers • Product dimension, weight, and other physical characteristics • Transportation Demand • Desire to ship products from origin to destination locations. • Includes quantity of the products to be shipped, the mode of transportation, the value of the products, and any lead time or distance requirements. • Transportation Network • Highway, rail, and water network and capacity data • Site Location • Includes geographic location information of origin and destination points • Includes facility capacity • Site Cost • Includes fixed and variable costs associated with operating the sites • Transportation Cost • Includes all cost components associated with shipping a specific product from origin to destination Confidential

  8. Expected Results • Baseline Optimization • How do we best use the current supply chain network to deliver optimized results? • Identifies alternative routes, alternative modes, etc. in current network • Greenfield Scenario Analysis • What are the new infrastructure elements to develop and where should they be located to optimize the network? • Identifies new distribution centers, cross-dock facilities, consolidation points, etc. Confidential

  9. Expected Results • Quantitative Analysis • Cost, lead time requirement, capacity, etc. • Qualitative Analysis • Strategic directions • Environmental impact (carbon footprint and road mile reduction) • Network redundancy • Tax incentive / funding availability • Public relations Confidential

  10. Network Design and Optimization Example Confidential

  11. Current Network – Example • Current Network Definition: • The actual network of Agency A, which we will use as a first step to start our analysis, has the following characteristics: • Sites & products included as part of the baseline model, in addition to Demand Dataand specific Sourcing and Transportation Policies. Confidential

  12. Current Network – Example (cont’d) • Current Network Results: • After the first Baseline run, we have matched the current Agency A’s Network results in terms of: • Transportation Costs • Inbound Flows per Product • Outbound Flows per Product • Inbound Flows per Origin and Destination • Outbound Flows per Origin and Destination Confidential

  13. Current Network – Example (cont’d) • Current Demand Distribution: • Several clusters of customers and demand concentration that can be easily identified via Demand-Scaled customer distribution map: • Customers are mainly located to the eastern side of U.S. • However, there are some specific states with high demand concentration such as California, Texas (South) and New Jersey. Confidential

  14. Current Network – Example (cont’d) • Relationship between Customer Sites and DCs: • Specific sourcing policies driving allocation of customers to DCs, depending on the product (brand) that flows through the network: Distribution Centers: Northridge (CA) • Product X Moreno Valley (CA) • All Products Sandy (UT) • Product Y Elkhart (IN) • Product Z Confidential

  15. Current Network – Example (cont’d) • Current Product Flow: The highest demand of product comes from X. This is why most customer sites are fulfilled by Moreno Valley DC in California. This map includes the flows of all products (X, X1,X2 and X3) through the current network configuration. However, we can also analyze individual product flows. Confidential

  16. Current Network – Example (cont’d) • Current Flows per Product: Product X – Moreno Valley, CA Product Y – Moreno Valley, CA Confidential

  17. Baseline Optimization – Example • Optimized Flows per Product: Product X – Sandy, UT Product Y – Elkhart, IN Confidential

  18. Greenfield Analysis - Example • We have run several scenarios, looking for the optimal network configuration. • 1 DC: An optimal Network Configuration of a unique-central DC. • 2 DCs: An optimal Network Configuration of 2 DCs. • 4 DCs: An optimal Network Configuration of 4 DCs. • Actual Network + 1 DC: An optimal configuration of the actual network, adding one additional DC. • Inbound through Savannah: An optimal Network Configuration, considering that all the Non-US origin product is received through the port of Savannah. • All these scenarios consider the actual customer and demand distribution. • The obtained results were compared with the current network configuration. Confidential

  19. Greenfield Analysis – 1 DC Proposed DCs: • Iola, KS Current DCs Proposed DCs Confidential

  20. Greenfield Analysis – 2 DCs Proposed DCs: • Los Angeles, CA • Louisville, KY Current DCs Proposed DCs Confidential

  21. Greenfield Analysis – 4 DCs Proposed DCs: • Jersey City, NJ • Los Angeles, CA Current DCs Proposed DCs • Houston, TX • Morton, IL Confidential

  22. Greenfield Analysis – Actual + 1 DC Proposed DCs: • Actual Network • Houston, TX Current DCs Proposed DCs Confidential

  23. Greenfield Analysis – Inbound via Savannah Proposed DCs: • Savannah, GA • San Diego, CA • Northampton, PA • Eureka Spring, AR Current DCs Proposed DCs Confidential

  24. Benefits for Federal Agencies Confidential

  25. Benefits for Federal Agencies • Demand-based network design and optimization approach delivers: • Practical and proven approach in the private sector • Cost effective – focusing on real demand • Proactive needs identification • Reusable process – the analysis and design framework can be used for subsequent studies • Specific and actionable optimization strategies • Detailed ROI analysis for each strategy • Significant savings to your supply chain Confidential

  26. Questions & Answers Thank you for participating in today’s session. For more information, you can contact today’s speaker at: Richard Langer 651-964-4646 x800 richard.langer@quetica.com

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