The Question
Case study · Retail · Store fulfillment network
Client's brief · reconstructed excerpt · values held in confidence
(withheld) runs one distribution center and more than 25 stores across (withheld) Canadian provinces. Every online order ships from the distribution center, which also sends a truck or two a week to each store. Online sales keep climbing, and fuel costs and inflation are pushing the cost of each delivery up with them. Leadership has set two targets that usually pull against each other: cut the cost of delivering online orders and cut the time customers wait for them, without letting service slip. The idea on the table is to let the stores fill online orders. Nobody yet knows which stores, or how many.
Bars cover values SimWell holds and is not releasing. The released figures stand as printed.
§ 1
Every online order starts its trip at one distribution center. The stores are spread across the country, so filling orders from them could shorten the trip. Whether it also lowers cost depends on which stores do it and how they work together.
Which stores should fill online orders? One per province, every store, or a few hubs fed by the rest.
Should the stores work together? A store that cannot fill an order could pass it to one that can, or send the item to a hub.
Each answer changes cost and delivery time at once, and the retailer needed both to move in the right direction.
§ 2
Moving online orders into stores touches everything the network already does. If a store does not have the item on hand, the order goes somewhere else. If an online order takes the last unit on the shelf, a walk-in customer leaves without it. Orders shift away from the distribution center, which changes how many trucks leave it and where they go. And every store taking on online volume needs room for the inventory to cover it at peak.
Each of those questions moves the others. A store chosen for its location can fail on shelf space; a hub that cuts delivery time can add trucks. The retailer needed to see the whole network respond to each option before committing a single store to it.
§ 3
SimWell built a simulation of the retailer's supply chain network, starting with a base case of the network as it ran, checked until its costs came close to the retailer's actual costs. Working sessions with the retailer's team supplied the data and the operating rules.
From that base, the team tested the options on the table: one store per province filling online orders, every store acting as a delivery hub, and one hub per province with the other stores as satellites sending to it. Each version reported cost, delivery time, and service side by side.
§ 4
The team compared a few dozen scenarios, weighing cost against service across online and in-store operations together. A network that served online customers faster by emptying store shelves would only move the problem from one customer to another. One balance met both targets, and the retailer chose it.
Cleared for release
Delivery time for online orders fell by half and total transportation cost by 5%, with service held at about the level customers already had. The retailer hit both targets at once.
SimWell helps operators make better decisions under uncertainty. We build simulation and optimization models that reflect operational reality, test scenarios before committing resources, and transfer capability so teams can run decisions independently.
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