Retail consolidation in synchronized supply chains

In this paper, we describe a basic model to analyze a mixed consolidation strategy with direct and indirect shipments through stockless consolidation centers. This model can help to approximate the potential savings in a retail distribution network. Based on our transport consolidation model, we show that Supply Chain Synchronization considerably increases the use of direct shipments and lowers the costs of handling and transport. This theory was applied in a practical case situation at a retailer in the Netherlands, with remarkable results. On the transportation budget for dry grocery alone, potential savings already exceeded 5 million Euro per annum. Further research will try to extend the model to accommodate delays at the consolidation centers, since these delays can increase the available load at consolidation centers, needed for an efficient hub operation.