A great opportunity for cost-savings is to evaluate your distribution network. Especially if you have multiple warehouses, DC’s, or “nodes” in your distribution network, it’s important to ensure that it functions as cost-optimally as possible.
Excessive costs come in the form of:
- Inefficient processes that increase the need for manual labor
- Ineffective processes to track and manage inventory, resulting in losses, obsolescence, and write-offs
- Inefficient processes or problematic training that result in product damages
- Failure to execute RFPs that ensure most cost-effective partners
- Over-handling in the form of moving product between production facilities or storage locations
- Excessive distances from DCs to end-users
There are tools available to run a network analysis, provided you are able to access data such as volumes, costs, locations, shipment lanes, customer demand projections, to name a few.
If the number of nodes (locations) and arcs (shipping lanes) in a network are relatively small, this analysis can also be done with Excel spreadsheets.
If you reach the decision to change your distribution network in order to capture savings and value, there are some key considerations to factor into the project plan. We recommend assigning a project manager with bandwidth to ensure ownership and completion of tasks, and potentially augment the execution resourcing for your organization.
Considerations for the project plan include:
- Defining and documenting key warehouse, inventory management, and shipping processes in order to ensure new locations can accomplish requirements and that training is effective
- Coordinating the physical movement of all inventory in a way that minimizes disruption to daily shipping
- Parallel inventory planning to eliminate stockout risks as product moves
- Cut-Over planning and testing to eliminate disruptions to customer shipments
- Implications of quality and regulatory requirements
- System integration monitoring (or dual data maintenance) between old and new systems, if applicable
- Onboarding new employees to absorb the additional transactional work
- Process and RACI design and documentation
At Waypost Advisors, we offer project management resources with experience in activities such as warehouse consolidations that can help drive delivery of your project on-time and in-budget.