Redesign resilient production and distribution networks in the food catering industry

The catering industry is responsible for producing and distributing meals in schools, hospitals, and companies' cafeterias. Dietary pattern changes and smart working caused by the Covid pandemic highly affect the food catering industry. The demand contraction put in crisis the typical distributed productive structure of such a sector. A 30% revenue reduction from 2019 to 2020 called for the widespread network of production plants to cut corners. Production centralization leads to economies of scale but increases the logistics costs of distribution. We present a real case study of production network downsizing in the catering industry, focusing on optimizing logistics and fixed capacity costs. Meals distribution has tight time constraints due to the consumers-imposed time windows and the microbiological safety rules-imposed time windows. The proposed methodology integrates the vehicle routing problem developed by the company into a network costs optimizations problem. This optimization model exploits the pre-optimized routes defined by the company, chooses which plants to open, and performs the customer-route pairing for each picked production site. Different allocation scenarios of the same demand distribution are defined and analyzed in the case study, allowing a quantitative comparison between different redesign strategies. Results show how the mileage varies among the centralized scenarios, with a cost differential from +61% to + 29% compared to the distributed scenario. The comparison of pre and post covid demand scenarios shows how the model cushions the logistics costs: the optimal choices of the routes allows a 22% traveling reduction in the 38% post-pandemic demand reduction of the same service area. The model supports the decision-making process in the network redesign of the food catering industry by analyzing how alternative location-allocation scenarios deal with different demand patterns.