DISTRIBUTION NETWORK DESIGN
Scope
The scope covers the footprint and flows for distribution of finished goods from manufacturing and suppliers to customers. In other words; where to locate your intended facilities, whether it's distribution centers, fulfillment centers, or warehouses, and which customers should be served with which products from each location.
Objectives
To establish the distribution network that:
Maximizes the customer service
Minimizes the logistical costs
Maximizes flexibility
Maximizes robustness to minimize the risks when the conditions change
Deliverables
1. Best Distribution Network
A recommendation of the overall best distribution network, based on cost and service level, from warehouse to customers.
2. Alternative Networks
At forecast volume, various conceptual alternative networks evaluated based on transportation costs, warehousing costs, inventory carrying costs and service performance levels.
3. Supporting Analysis
All supporting analysis, including planning factors, demand factors, supply/demand maps, risk analyses, market analysis, local opportunities and others as identified or required.
4. Noted Improvements
As data is parsed and the project progresses, any observed opportunities for improvement in the distribution network will be relayed as they are identified.
5. Implementation of the recommended distribution network
We plan and manage the implementation to ensure no business interruption.
Tasks include:
Project Detail Planning
Creating and agreeing on an implementation plan that minimizes business disruption, generally in Gantt chart format.
Bid Management
Handling all aspects of bid management, including: developing RFPs, soliciting RFPs responses, evaluating supplier responses, assisting contract negotiations.
Implementation Management
Managing physical implementation: coordinating vendor scheduling, maintaining implementation plan, managing any unforeseen issues, verifying installation quality.
Methodology
Project Kickoff: Learn business requirements and scope of improvements.
Gather & Analyze Data: Collect and analyze all required data pertaining to the supply chain, both qualitative and quantitative.
Data Validation: Validate the accuracy, completeness, and consistency of the collected data to ensure it is suitable for analysis and modeling.
Establish Baseline: Develop a baseline model representing the current-state supply chain to serve as a comparison point for conceptual scenarios.
Center of Gravity Analysis: Calculate the optimal facility location(s) using Establish’s center of gravity analysis based on customer demand and/or other inputs.
Conceptual Networks Scenarios: Evaluate multiple supply chain network scenarios that align with business goals, incorporating constraints, service levels, and cost trade-offs.
Recommendations & Deliverables: Present prioritized recommendations supported by data-driven insights, along with supporting documentation.
Time-Phased Implementation: Outline a realistic and phased execution plan that aligns with operational timelines, investment requirements, and change management readiness.
The four main criteria, quantitative and qualitative, of each concept are:
Transportation
Analyzing transportation costs and service levels based on modes and requirements.
Warehousing
Determining the sizing and staffing levels, while identifying the lowest cost for each required facility.
Inventory
Calculating the effects of each concept on inventory and service levels.
Sensitivity
What-if analysis to determine the robustness of each alternative.
Planning Factors
Pools/ Consolidations
Route Optimizations
Mode Optimizations
Other
Outsourcing to 3PL
Warehouse Efficiencies
Economies of Scale
Regional Opportunities
Deployment by Facility
Vendor-Managed
Customer-Specific
Other
Risk Analysis for Unwanted Factors
Assumption Evaluation
Forecast Validation
Why Establish?
Establish has experience from hundreds of supply chain network optimization projects.
We are supply chain management consultants, which means that the qualitative and practical aspects are included in the evaluation besides the mathematical algorithms.
Establish is totally unbiased, which guarantees that the solution is optimized for your operation.
To optimize a distribution network it takes skills and experience in transportation, warehousing and inventory management. We have it.
TOOLS & METHODS
Within distribution network design, we are using state of the art tools and methods. Below you will find some of the more important tools.
Assign™
CzarLite
PC Miller
Logivations
Supply Chain Guru
Optimity
WHITE PAPERS & CASE STUDIES
Establish has a long track-record within supply chain design. The case studies below are just a few examples of achievements from Establish supply chain consultants together with clients.
Supply Chain Network Optimization for a Building Materials Company
Establish did a network optimization study for a building materials company to develop a long-term strategy that would increase service levels and reduce costs.
Optimal Distribution Network for Consumer Goods in Europe
Establish helped a fast growing consumer goods giant determine the optimal distribution locations and strategy in Europe.
Optimizing the Distribution Network for Frozen Food
Establish conducted an analysis to determine the best distribution network within the US from a cost and service level perspective.
Global Supply Chain Strategy - Medical
Establish conducted a global supply chain network study to determine the ideal strategy for a company that grows through acquisition.
Determining Where to Conduct a 3PL Search in Europe
Establish conducted a network optimization study to determine the optimal location to conduct a 3PL search in Europe.
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