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Driving Logistics Synergies: How Network Optimization Delivered Over 15% Cost Savings for a Multi-Billion Dollar Animal Health Products Manufacturer

How Lambda Supply Chain Solutions helped a multi-billion-dollar animal health products manufacturer optimize its logistics network and reduce costs after acquiring a boutique equine and pet care nutrition company. Here’s a summary:

Problem:

The acquired company’s logistics costs were 18% of revenue, exceeding the industry average.
The challenge was integrating two networks (14 distribution centers) while reducing costs and maintaining service quality.

Solution:

1. Baseline Analysis:

Created a digital twin of the network using Optiflow to identify inefficiencies. Found demand being served from suboptimal distribution centers.

2. Network Optimization:

Simulated scenarios with 3-6 distribution centers to find the optimal setup.
Recommended changes in DC placement, inventory redistribution, and shipping strategies.

3. Additional Strategies:

Zone Skipping: Identified hub locations for better load consolidation to reduce parcel costs.
Packaging Optimization: Switched from plastic buckets to plastic pellets, saving $12 per package.

Result:

Achieved a 17% reduction in logistics costs through optimized inventory placement, transportation strategies, and packaging.