What Happens When a Company’s Logistics Network Is Optimal?

It is hard to believe, but it does happen once in a while, exactly twice in the 15 years of doing supply chain network strategy work for numerous of companies in different industries, when a company’s logistics network is optimal even though it has not been reviewed holistically for at least 5 years.

Most companies perform logistics network studies to identify opportunities to reduce costs and improve service and instinctively think relocation.  However, at times, this is not the result.  There are a number of other opportunities to reduce the logistics costs and improve service performance without relocating a warehouse/distribution center. 

The companies who have optimal supply chain/logistics network do benefit from performing a supply chain/logistics network evaluation work.  The in-depth process provides an opportunity to identify short- and long-term improvements as well as allows the corporation to realign its goals and objectives across departments on how to best serve its customers today and for the next five years.  Typical benefits/ improvements include:

  • Reevaluation of the current S&OP policies and procedures.

  • Benchmark (costs, productivity and efficiency) of warehouse(s)/distribution center(s).

  • Benchmark transportation rates and audit transportation policies and procedures.

  • Identify transportation mode changes.

  • Evaluate inventory deployment strategies.

  • Renegotiate customer requirements.

  • Redefine shipping policies to customers.

  • Other

These benefits, at times, are significant impacting the company’s bottom line immediately.