Evaluation of bulk and packaged distribution strategies in a specialty chemical company

Abstract

A logistics cost model is developed for a chemical distribution system from a single plant using bulk and packaged transportation strategies. The purpose of this research is to provide a tool that helps understand the cost trade offs in the operation of a logistics system at a strategic level for large scale systems and complex distribution systems. An analytical modeling approach was used to determine variables that define transportation, storage and material handling costs in the system. Several distribution strategies were evaluated and benchmarked in terms of costs against the current. Savings offered by the packaged distribution system for a single plant were marginal; extension of the current model to evaluate cost reduction opportunities across the complete network of plants and distribution centers is proposed for further research effort.