The Impact of Product Portfolio Complexity on Fleet Size

Abstract

The assortment of products that a company offers is one aspect that affects the complexity of their supply chain: the greater number of products, the greater the complexity. This project aims to measure how reducing the number of products affect the multi-compartment fleet size in a construction chemical industry company. The reduction of products, called replacement, was done by aggregating the demand of products that have similar characteristics but different density and concentration, without affecting the revenue. The analysis was performed by running 8 scenarios of a Monte Carlo simulation for each of the 11 plants the company operates. The scenarios accounted for seasonality by running one scenario for each quarter, and for product reduction by running each quarter with and without product replacement. The results obtained show a reduction of 7.2% in the number of trucks required for the operation. Most of the reduction (approximately 90%) is explained by the use of higher density of replacement products, which are more concentrated, and the remainder through more efficient loading due to reduced complexity with fewer products. A sensitivity analysis was also carried out on several parameters, such as average distance per trip and average demand, among others. For this problem context, it can be concluded that other factors such as the reduction of the average distance per trip or the decrease of the time per stop have a greater impact on the reduction of the fleet than the reduction of the number of products in the portfolio.