Sector : Logistics

Industrial Challenge (2023 – 2024)

Using simulation models to calculate optimal distances for new warehouse locations situated in free zones

Project Summary

Petroleum Development Oman (PDO), with its rich legacy that began in 1925, has played a pivotal role in Oman’s oil and gas development, driving economic growth and contributing significantly to the nation’s prosperity. Continuing to build on this success, PDO is now embarking on a transformative journey to address certain challenges including the overall reduction in CO2 and GHG.

PDO recognises the importance of staying at the forefront of innovation and efficiency as key to upholding its unwavering commitment to excellence. Therefore, the company is exploring novel ideas and solutions that will optimise operations and boost overall performance to ensure that its warehousing practices align with contemporary needs. One of the key areas PDO seeks to address is the inefficiency in their current warehouse operating model. It acknowledges that outdated practices may lead to unnecessary costs and disruptions in transportation.

In this proposal, we aim to enhance PDO’s operational excellence, and improve warehousing and distribution network efficiency. By embracing innovative practices and adopting modern approaches, we aspire to streamline road exposure hours, reduce operational costs, enhance financial performance, ensure smoother logistics and timely deliveries, and in general, reinforce the company’s position as a driving force in Oman’s oil and gas sector.

Accurate and up-to-date information on inventory levels, supply chain flows, and demand patterns is essential for making agile, market-responsive choices. Through this proposal, we seek solutions that can ensure a robust and data-driven approach to managing PDO’s warehouses and distribution network.

This study combines supply chain optimisation and simulation for logistics network designs, warehousing, and distribution processes. By integrating GIS analysis and simulation-based optimization approaches, the study aims to provide a more holistic and efficient decision-making approach that leads to better Key Performance Indicators (KPIs) like travelled distance, transportation and inventory costs, expected lead time service levels, and CO2 emissions.

This research is anticipated to yield valuable insights into the intricacies of petroleum warehouse location scenarios, encompassing ordering, inventory, and transshipment routes. Additionally, the project seeks to demonstrate the practical applicability of advanced methodologies in tackling real-world challenges and refining supply chain management strategies. In doing so, various scenarios are designed, and the best scenario is selected based on the KPIs defined through literature and by PDO experts. AnyLogistix software is used as the platform to implement the simulation-based optimisation analysis.