Greenfield analysis aims at taking into account the customers' geographical location and their demand volumes find suitable geographic locations distribution centers.
There are two different approaches, Center of Gravity Greenfield Formulation, and Service Based Greenfield Formulation. Service Based Greenfield Formulation allows the model to decide “how many?” and “where?” given customer locations and service requirements. Service Based formulation can provide a strategic advantage from a service lead time- or distance perspective. The objective is to cover the most number of customers or demand using the fewest number of distribution points within a defined set of service distance goals
Once new location candidates have been identified with one or both of the above described approaches a more detailed network model can be created adding more cost elements, capacities and constraints. In addition detailed route optimization and/or inventory optimization can be applied as a third step to secure that the new supply chain set-up will perform as planned.
Example questions for greenfield analysis include:
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