Planning for distribution cost optimization in textile market of Indore

Abstract

Cities are evolving faster than ever and so is the technology. With the rapid development, urbanization, and growth in every sector contributing positively to the overall economy, the logistics sector is also on a big growth tide. Urban goods movement signifies the secondary and primary (for the nearby industries) distribution of commodity. It is vital as cities are the centers of economic and social life and urban freight distribution underlines the physical and managerial activities necessary to support them. The literature study highlights the importance of optimization distribution cost to the stakeholders and the enterprise. It becomes imperative to mention that the optimization of the cost involved in logistics has not yet received the attention it deserves in practice owing to an unorganized and fragmented market setup. This research is an attempt to quantify and evaluate the various costs incurred in the distribution channel taking the case of textile markets in the study area Indore. The research aims to provide solutions to optimize the distribution costs for the stakeholders in the current market setup. The market scenario has been sketched through various primary surveys and stakeholder interviews conducted in the study area. The whole process of distribution has been assessed over various key performance indicators (KPIs) and an exploratory factor analysis has been done to identify the latent distribution cost components relevant for further assessment. The components identified from the factor analysis are further assessed and generalized cost equation has been obtained for all distribution routes by regressing the total cost with respect to the individual components. Assessment of both the distribution cost as well as the opportunity cost concerned with the fleet and labor has been done to estimate the scope of optimization in the whole process. Two scenarios have been developed to contribute towards the aim. Finally the research concludes with the recommendations for obtaining an efficient distribution channel through optimal vehicle routing with restricted time windows for delivery during off hours along with increased fleet utilization measures.