Unconventional case - designing logistics network

BCG
Edited on Jul 05, 2021
3 Answers
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Anonymous A asked on Jul 04, 2021

Hi All,

Recently I got asked - A heavy metals manufacturer wants to design its logistics network. How should they go about it? For scoping, you have to focus on just the transportation from mine to facility and facility to customers. Can I get some ideas on it? How should we approach such non conventional cases? 

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Udayan
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updated an answer on Jul 05, 2021
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There is not a lot to go off of here but the following are things to consider when designing an optimal logistics channel

  • Mode of transportation - you will need to decide what mode (Rail, Road, Sea) suits you best and go through the pros and cons of each. Factors to look at
    • Location of mine for example you will - you will either need to be next to a railroad or have the ability to build one if needed
    • Location of facility and customers
    • Access
    • Distribution size - how far do the items need to go? Is one mode of distribution enough?
    • Associated costs based on the answers to the questions above
    • Time - what is the lead time required for your end customers and factor that into the best alternative
  • Market overview
    • What are competitors doing and why?
    • Local and Int'l solutions to the above issue
  • Regulatory requirements
    • Regulations on what can be transported and how
    • Environmental concerns with using different methods (for example are you allowed to create a new rail network if it means destroying forest land?)

Udayan

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Ian
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replied on Jul 04, 2021
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Hi there,

There are a few ways to approach this, but first we need to know our objective? Are we looking to minimize costs, maximize output/capacity, etc etc.

For this, I might recommend a people, processes, tools approach. Or, you could approach it from the value-chain. Finally, you can look at it in stages (e.g. set up x, then y, then z).

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Anonymous A on Jul 05, 2021

I was asked - what should the criteria be? I answered - cost minimization with the best delivery timelines thus - minimum opportunity cost.

(edited)

Anonymous B replied on Jul 04, 2021

It's a great case - makes you actually think!

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Anonymous A on Jul 04, 2021

What do you think? How would you approach?

Anonymous B on Jul 04, 2021

Why don't you give it a try first and get people to help you refine. Practice makes perfect!

(edited)

Anonymous A on Jul 04, 2021

Yeah, I have solved it already - breaking it down into cost structure of the transportation incl. Fleet costing, vendor/in house considerations, cost/quantity, etc..

Udayan gave the best answer

Udayan

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Top rated McKinsey Case & PEI coach/Multiple real offers/McKinsey EM in New York /6 years McKinsey recruiting experience
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