Distribution Network Modeling is the process of evaluating a current or potential distribution network infrastructure to determine the trade-off between service level performance and total cost associated with providing a given service level.
Ultimately it helps to answer the questions of how many distribution centers should be operating, where they should be located and what functions they should have. It also determines the cost to operate alternative network configurations at varying levels of service performance.
Transportation is one key cost driver which should be monitored and modeled on a routine basis to understand the dynamics of a given network infrastructure. Other cost drivers include; warehousing, inventory carrying charges, systems and technology, tax considerations and administration.
Distribution Networking Modeling is a data intensive process that beings with identifying the sources and availability of the required historical data and the method by which to collect and summarize the data into useful information.
The primary benefit of this solution is to determine that minimum number of facilities at the lowest operating cost which can satisfy customer service objectives.