Optimizing distribution strategies: An analysis of finished goods distribution network strategy in Europe for Qvantum Energi AB

Sammanfattning

Finished Goods Distribution Network (FGDN) design is an important aspect of Supply Chain Management (SCM), and companies are constantly working towards balancing cost, service level and product quality in the design. At the same time, sustainability has gained an increased focus by stakeholders which has led to both challenges and opportunities in the logistics industry. The FGDN optimization is especially relevant for manufacturing companies like Qvantum, which is a heat pump manufacturer that is expanding its market across Europe. The purpose of this master thesis was to evaluate different FGDN scenarios for Qvantum, and to identify the most suitable design in terms of cost efficiency, service level, network resilience and sustainability. The purpose was defined together with practitioners at the company to address the current issues with the distribution network. The thesis was conducted according to the Design Science Research (DSR) approach following the steps framing, creating, validating and theorizing. The research was conducted on the single case, Qvantum. A literature review was conducted where a conceptual framework was formed, which was combined with data from interviews, observations and secondary data. This provided a basis for the quantitative modeling that was done to simulate different FGDN scenarios and was used to evaluate these further. The analysis showed that the proposed FGDN configurations provided areas of improvement in different aspects, and it highlighted the importance of trade-offs between the key objectives in distribution network design. Maintaining the current structure with small organizational changes was proven to be the best short-term solution when considering all the empirical findings. Long-term recommendation was concluded as opening a Central Distribution Center (CDC) in Germany, with a combination of multiple transportation modes as it was found to enhance cost efficiency, sustainability performance, network resilience and service level to customers. The recommendations were presented following the conclusions of the research objectives, the qualitative and quantitative empirical findings as well as the inputs from the company. This study validates existing theory regarding trade-offs in Supply Chain (SC) design and provides a theoretical contribution to FGDN design. It further offers strategic recommendations for the case company Qvantum both short-term and long-term.