The Effectiveness of the Clarke & Wright Savings Algorithm in Determining Logistics Distribution Routes (case study PT.XYZ)

International Business Management Program, Management Department, BINUS Business School Undergraduate Program, Bina Nusantara University, Jakarta, Indonesia 11480

^* Corresponding author: rnurtjahjo@binus.edu

Abstract

A good logistics system is one factor that affects the smooth running of company activities. Currently, transportation costs account for about two-thirds of total logistics costs, so to increase efficiency, companies try to maximize the use of transportation equipment and personnel by determining the optimal distribution route. Route optimization can be done using the Vehicle Routing Problem and the Clarke- Wright Method. PT. XYZ is a company engaged in maintaining ATM machines (Automated Teller Machines). The form of this activity can be in the form of installing air conditioners, TVs and repairing ATM machines. This company faces problems in the logistics section, where the installation target is often not achieved from the specified target. This is because the distance from one point to another is coupled with the congestion level in big cities, so this causes the company to pay large operational costs. Therefore, a distribution route is needed to save time and distribution costs. This study uses the Clarke and Wright Savings Algorithm to solve the problems faced by companies. The results showed that after using the Clarke and Wright Savings Algorithm, the total distance and shipping costs were reduced by saving 97.9 Km of distance and saving costs.