Horoz enjoyed a cost savings of approximately $400,000 per year with their application of AIMMS, which they feel exceeded their expectations in large part because of AIMMS’ capabilities and ease of implementation. In the future, if the client allows Horoz to integrate with their production and sourcing programs, the potential savings could easily be doubled.
Horoz Logistics, an integrated logistics services provider in Turkey, used AIMMS to optimize nationwide distribution of fertilizer in Turkey, achieving annual cost savings of $400,000 for its client.
Horoz Logistics is a provider of integrated services with a turnover of $300 million in Turkey. Horoz operates in the areas of air & ocean freight forwarding, international overland trucking, domestic distribution, and warehousing (multi-user and dedicated). Horoz seeks to combine several of these services with IT solutions/integration.
For a large client, a fertilizer producer and importer, Horoz distributes roughly 1.6 million tons of fertilizer nationwide. Distribution activities mainly consist of transportation and temporary storage. Fertilizer is either manufactured locally or imported into Turkish harbours, where they are then destined for the final client. Seasonality, climate and third party truck sourcing have effects on the demand and distribution. The total transported load corresponds to over 80.000 truck movements per year.
- 3 manufacturing facilities
- 22 commodity types (no substitution)
- 80 major client destinations – delivery points
- 17 possible harbour locations for imports
- 14 front stocking locations (local warehouses)
- 52 week planning scheme
To minimize costs for nationwide distribution (transportation and storage) of fertilizers in Turkey:
- Which harbour to import from, and which locations to distribute for each import?
- Which location to be fed by which plant (or warehouse), how much and when?
- How much stock from each commodity to be kept at which stock location?
A mathematical model representing the above stated situation was developed together with the client. Client data (production, demand etc.) and Horoz data (capacities, costs, route and harbour options) were fed into the system to find the most plausible decisions leading to the minimum logistics cost. The basic solution was analysed from different perspectives to see if there was further potential for improvement. At this stage, sensitivity analysis was carried out regarding transportation and storage capacities as well as harbour options.
At the next stage, multiple scenarios were developed and tested for potential changes in the business or distribution network. The addition of new facilities or routes, even the possible effect of a new manufacturing facility was assessed. Finally, a simple user interface was developed to feed/modify data, followed by basic output options and pivot tables for reporting.
Horoz enjoyed a cost savings of approximately $400,000 per year by this project, thanks to the AIMMS capabilities and ease of implementation. In future, if the client allows Horoz to integrate with their production and sourcing programs, the potential savings could easily be doubled.
How did AIMMS add value?
Horoz Logistics has been using AIMMS since 2005, and cites a long list of good reasons to do so: the algebraic modeling, the potency of the matrix generator, the new approach to developing user interfaces, capacity to handle massive data dynamically and countless other superiorities.
Horoz’s current use of AIMMS is more of a “technician’s work”, where major decisions are made and then elaborated. The next step is to develop ways to use this model wide-spread for smaller scales with many other people and every day. Horoz also plans to employ AIMMS in various other operational areas such as customer portfolio management, staff scheduling and in-city route optimization.
Cenk Arslan, VP Business Development & Information Systems, says “I have observed with great admiration that AIMMS has clearly excelled the competition; especially by means of your vision to provide a capable, yet easy to use platform to address real life problems. The ultimate test for a decision tool in my sector is whether it provides a real and applicable solution. A real solution in business life corresponds to efficiency and a solid financial return to your business. This is exactly what we achieved with AIMMS in our business, despite the fact that we could utilize only a portion of the potential it provides.”