Authors: Chloe Ireland, Mathematics PhD student, The Ohio State University, and Sarikaa Sridhar, Computer Science & Engineering PhD student, The Ohio State University
In today’s fast-paced, consumer-driven world, meeting customer demand is more challenging than ever. With purchases happening both in brick-and-mortar stores during the day and online at any hour, ensuring optimal inventory management, timely delivery, and efficient restocking processes is crucial for staying competitive. Businesses that offer faster delivery windows and swiftly address unexpected supply chain disruptions gain a critical edge, encouraging franchises to rely on their network’s distribution systems.
This summer, our internship team at Mined XAI tackled a central issue: Given the varying product needs of franchises, where should we place a new distribution center to ensure seamless inventory flow and timely supply replenishment? The answer revolves around one key concept—defining what “optimal” means for distribution center location.
Defining “Optimal” for Distribution Center Placement
The definition of “optimal” varies based on business priorities. Is speed the top priority, or is it inventory precision? If efficient, local distribution is key, franchises might want direct access to a nearby distribution center. Alternatively, for speed, neighboring franchises could coordinate to share inventory and quickly fill gaps. Another consideration could be whether target markets demand specific products in certain areas, prompting a more nuanced approach to inventory placement.
A 2023 study by McKinsey suggests that businesses prioritizing agility and flexibility in their supply chain networks are 2.5 times more likely to outperform competitors in terms of customer satisfaction and operational efficiency.
No matter how you measure a location’s suitability, these considerations can be turned into measurable metrics to evaluate potential sites.
A Multi-Metric Approach to Distribution Center Placement
We took this a step further by evaluating potential distribution center locations using multiple metrics simultaneously. This dual approach offers flexibility: If a company wants to prioritize a single metric—such as proximity to high-demand areas—it can make decisions accordingly. Alternatively, if the goal is a well-balanced location, combining several metrics helps determine the “jack of all trades” option, optimizing for both speed and cost-efficiency.
Mined XAI’s proprietary XAI architectures and in-house software played a pivotal role in our evaluation. By leveraging advanced data analytics, we were able to refine how we approach distribution network design and ensure each potential location was rigorously analyzed for both current and future needs.
Addressing Real-World Challenges in Supply Chain Optimization
One unexpected challenge we encountered was understanding what constitutes “realistic” assumptions. In an academic setting, assumptions often don’t need to closely reflect real-world conditions. But in a consumer-facing, fast-moving environment, grounding models in realistic data and operational insights is critical.
Our challenge wasn’t just about finding prime locations for distribution centers. It was about refining our approach to solving real-world supply chain issues, from making realistic assumptions about consumer behavior to adapting our models for dynamic market conditions. We learned that effective inventory and supply chain management require not only advanced technology but also an understanding of practical, day-to-day challenges in the business world.
Final Takeaway: The Future of Supply Chain Optimization
During our internship, we realized just how critical data-driven decision-making has become for supply chain and inventory management. It’s not just about crunching numbers—it’s about using advanced tools like Mined XAI’s solutions to make smarter decisions. These kind of insights help businesses determine exactly where to place their distribution centers for maximum efficiency and customer satisfaction.
With supply chain disruptions and fast-changing consumer demands becoming the new normal, using a multi-metric, data-focused approach isn’t just a nice-to-have anymore—it’s a game-changer. It’s what gives businesses an edge, helping them stay ahead of the competition and building lasting loyalty with their franchise partners.