Middle Mile Optimization
Optimizing the middle mile in a supply chain is a daunting undertaking. There are so many factors to consider with each of them impacting the other and resulting in a tangled mess seemingly impossible to resolve. It is a problem retailers need to address to establish a consumer-centric distribution network that is agile and proactive to dynamic shifts in commerce by channel and region caused by inherent variability or any number of supply chain disruptions.
From a strategic perspective, some of the factors to consider include the design of the network (i.e., the tiers in the network in addition to the quantity, location, and size of the different site types), inventory policies (e.g., service levels and working capital), transportation considerations (e.g., fleet ownership and size) and enablement technology (e.g., which WMS, TMS and other systems?).
From a tactical perspective, factors to consider include sales forecasts, sourcing of goods, capacity constraints (supply, manufacturing, warehousing and transportation) and inventory allocation.
From an execution perspective, factors to consider include sales volumes, available inventory, staffing and routing to name a few.
Defining Middle Mile
For the sake of this article, middle mile is the movement of goods between sites in a supply chain excluding the first leg (or first mile) from a plant or supplier to a warehouse/DC/fulfillment center and, the last leg (or Last Mile) from a warehouse/DC/fulfillment to the customer. In a deterministic situation where demand is known ahead of time, there would be no need for a middle mile.
Where to Start?
The obvious answer is to first look at things strategically. There’s no point in optimizing your routing if you haven’t figured out where your DCs should be. However, when you are struggling to get product out the door of your existing DCs, the priority should be on execution to meet your current demand. Likewise, if you are having severe inventory shortages in some regions and are writing off too much inventory in another, the priority should on tactical inventory allocation. In the end, each approach needs to be tailored to the situation. In the long run, you will get the most benefit by first defining your strategy, then planning your tactics, and finally executing to your plan.
Bricz, a leading global supply chain solutions provider, emphasizes connectivity while providing compelling results and minimizing potential issues. We are focused on helping retailers and other consumer-centric industries optimize their supply chain. Interested in learning more about our services and how we can help elevate your supply chain? Reach out today at info@bricz.com to connect with one of our subject matter experts to get started.
Contributor: Louis Bourassa, Director of Supply Chain Strategy at Bricz