How to merge the logistics networks of two utility firms?

Details

Supervisors

Semal, Pierre

Faculty

Louvain School of Management

Degree label

Master [120] en Ingénieur de gestion

Abstract

Eandis and Infrax are semi-public firms and manage the distribution network of gas and electricity in Flanders. In 2017 they decided to merge to create Fluvius. The reasons stated were to reduce costs and improve efficiency in order to lighten the energy bill of Flemish residents by 3%. To reach this goal, Eandis and Infrax asked the Procurement & Supply Chain team of KPMG Belgium to advise the optimal model to follow for the future logistics network. This network is made of the whole physical flow of products needed to build and maintain the gas and electric networks. For instance, tubes, cables, pillars, or meters. The project needs to answer two concerns. Firstly, where will be the future central distribution center of the network? We will see in the developments that the choice will be reduced to the current distribution centers of Eandis and Infrax. An interesting aspect is that Eandis is working with an insourced distribution center, while Infrax outsources it to a contractor. This first concern will thus be a discussion of two paradigms: insourcing or outsourcing. Secondly, which network of local pick-up points is optimal to cover the area? The developments will also explain why the decision will only consist of opening or closing the actual pick-up points. This second concern will be analyzed by executing a network optimization. To answer these two concerns mentioned above, the research develops several options that could be implemented, to highlight the best solution. Based on quantitative and qualitative analysis, the research is intended to follow a wide approach on each option, weighing up the pros and cons of each aspect. The undertaken methodology consists of firstly defining clear scenarios, secondly testing them thanks to a cost analysis, a KPI analysis and a PESTLE analysis, and finally highlighting the scenario that seems to be the optimal. The particularity of this project is that these steps will be followed by using a bottom-up approach. In other words, the activities will be analyzed by focusing on the several workshops composing the supply chain, instead of a global top-down approach.