COLLECTION NETWORK DESIGN
Source, Consolidate, Transform
WHAT IS A COLLECTION NETWORK?
Whether you source perishable agro products, collect waste for energy or recycling, procure materials and components from manufacturers, the stakes are high:
Supply costs represent the majority of your operating expenses
Supply volumes are difficult to predict
Materials require to involve significant working capital
Brutal supply shortage that can compromise the entire business
Supply network can require multiple logistics assets to operate effectively and sustainably
The objectives are to minimize total cost, maximize material availability, minimize inventory and minimize carbon footprint. You add resilience to the equation and you get a full picture. It's complex but highly impactful. We take the challenge and help you build a world class inbound supply network for today and probable tomorrows. CEL helps taking a holistic understanding of the stakes and trade-offs at play in your supply network and identify alternative configurations and decision points.
Collection networks are meant to consolidate the volume of materials from multiple sources. They are particularly important in industries where the supply points are numerous and scattered in a wide geographical area.
Dry wastes: plastic, paper, metal, mineral, textile, etc.
Bio wastes: wood, food, by-products, industrial, etc.
Fresh produce: Vegetables, fruits, meat, seafood, milk, etc.
Dry products: grains, wood, rubber, coffee, ...
Postal / Express: letters, parcels collection
Last Mile: goods pickup from vendors
& Last Mile
Supplier network to consolidation warehouses or consumption points
Retail, Manufacturing, Trading
Where should our storage facilities be?
What storage and transport capacity will be needed?
What cost-to-procure is to be expected?
What inventory levels would ensure the best ROI?
What technology needs to be considered?
Which parts of the logistics should we outsource or manage ourselves?
What capital investment will be required, when, for what ROI?
What operating expenses are to be expected?
What working capital will be mobilised into the inventory?
Sourcing & Procurement
Where should we source from as a priority?
How can we mitigate risks of shortages due to heterogeneous supplier capabilities?
What are buying price and payment terms to sustainably balance our cost and our supplier's profitability?
What should we outsource or invest into?
HOW DO COLLECTION NETWORKS OPERATE?
Goods are locally consolidated, controlled and stored in small collection points. Specific inventory levels trigger a transport order to allow goods to be transferred to intermediate consolidation points. Goods can be preprocessed, sorted, and prepared at different stages of the network to ultimately end up in the final consolidation facility where it is further sorted. The final processing step is performed on a continuous basis requiring inflows to ensure a certain amount of buffer stock so there are no interruption of processing activities. Once enough material is processed, it can be redistributed to transformation plants. Collection networks are often subject to chaos as inbound volumes are usually uncertain, yet there is a strong need for supply continuity at the other end. That is where buffer stocks and transfer frequency can make or break a collection network, beyond its physical configuration.
DESIGNING A COLLECTION NETWORK
Estimating collection volumes
When it is about wastes or agro commodities, volumes are difficult to predict prior to actually collecting them. Yet volume estimates are needed to size and position different facilities involved in the network (collection points, consolidation facilities, processing facilities etc.). By analyzing demographics, econometrics, infrastructure, traffic or any available data, we help you determine volumes, their geographical distribution and potential evolution over time, with clear and solid assumptions. Now you know what, where and how much, the network design exercise can start.
Designing a collection network
Designing a collection network involves multiple factors. First, the goods themselves are subject to transportation, storage and processing requirements. They may also be subject to seasonality or volume uncertainty, thus requiring the development of a dynamic and probabilistic approach to quantifying the inflows of goods in the network. In addition, specific local constraints (e.g. road accessibility) may have significant impacts on the location and size of the facilities. Investment constraints may also prevent fully optimal set up, thus solutions for the best alternative configurations with limited capital are called for.
We will take you from strategic intent to practical answers on where and how big the facilities should be, how they are connected, how many vehicles would be needed, and what revenue and operating cost can be expected for how much capital investment.
CEL collection network design process is as follows:
Source type categorization
Location & mapping
Define collection routing & frequency
Simulate flows and define capacity requirement
Establish processing resource capacity need
Determine clustering approach
Define Consolidation facility location per cluster
Collection cost modelling
Scenario comparison and selection
Estimate Investment and revenue
Compute P&L evolution