Daily Logistics Planning With Multiple 3PLs: A Case Study in a Chemical Company

Abstract

The importance of efficient logistics management for chemical industry considered to be one of the important issues in process industries. Motivated from a chemical factory operating in Turkey cost efficient daily logistics planning using multiple third party logistics providers (3PL) with different contracting schemes are analyzed. In order to reduce planning time and maximize the physical vehicle capacity utilization problem of the company is formulated as a mixed integer mathematical model and a two-phase solution approach is proposed. Using the real life daily shipment requirement data the proposed model and the solution methodology is tested. Furthermore impact of various company practices and types of different transportation pricing schemes are analyzed to better design 3PL contracts. The initial results are very promising where optimum solution for large scaled problem can be obtained in seconds and the daily shipment planning can be updated dynamically whenever it is necessary. The analysis indicates that cost savings through holistic planning is robust to contracting schemes and specific clauses are not always needed to guarantee certain service quality. We believe that the efficiency achieved through the integration of such techniques can become highly attractive for further applications in the industry.