Optimizing the Distribution Network of a Bakery Facility: A Reduced Travelled Distance and Food-Waste Minimization Perspective

There are many logistics nuances specific to bakery factories, making the design of their distribution network especially complex. In particular, bakery products typically have a shelf life of under a week. To ensure that products are delivered to end-customers with freshness, speed, quality, health, and safety prioritized, the distribution network, facility location, and ordering system must be optimally designed. This study presents a multi-stage framework for a bakery factory comprised of a selection methodology of an optimum facility location, an effective distribution network for delivery operations, and a practical ordering system used by related supply chain actors. The operations function and distribution network are optimized using a multi-criteria decision-making method comprised of the Analytic Hierarchy Process (AHP) to establish optimization criteria and Technique of Order Preference Similarity to the Ideal Solution (TOPSIS) to select the optimal facility location. The optimal distribution network strategy was found using an optimization technique. This framework was applied to a real-life problem for a bakery supply chain in the Western Region, Saudi Arabia. Using a real-life, quantitative dataset and incorporating qualitative feedback from key stakeholders in the supply chain, the developed framework enabled a reduction in overall distribution costs by 14%, decreasing the total travel distance by 16%, and decreasing estimated food waste by 22%. This result was primarily achieved by solving the facility location problem in favor of operating two factories without dedicated storage facilities and implementing the distribution network strategy of direct shipment of products from the bakery to customers.