Streamlining the supply chain of the Hellenic sugar industry

The Hellenic Sugar Industry (HSI) is the largest state agricultural company and the single sugar-quota producer in Greece. HSI's management has embarked upon a reorganization project to identify cost structures and operational inefficiencies. We report on the aspect of the project that addressed the redesign of HSI's distribution network. The goal was to reduce the 3.5 million US$ transportation cost, which constituted almost 40% of the field operating expenses, and improve customer service. We have studied the supply chain, analyzed customer demand and logistics costs, and developed appropriate transportation models to derive optimal distribution practices. The approach incorporates all operating realities, including storage capacities at production-distribution facilities, routing costs, and actual flow patterns between supply chain nodes. Without resorting to radical restructuring of the existing logistics operations, but through optimal planning of inter-node material transfers, annual savings of almost one million US$ and improved demand coverage were achieved.