Distribution Center Optimization

An ongoing concern for many companies is deciding on the optimal amount and location of distribution centers within a country (or region).

The factors affecting the decision are usually:

  • The cost of carrying inventory (including operating costs)
  • The cost of shipping to the customer
  • The cost of inbound freight to the distribution centers
  • The cost of re-distribution within the distribution center network
  • Customer fill rates

Depending on the regional product mixes and sales patterns the answer is not always intuitively obvious.

Team Rastel recently concluded an in-depth study for a company using multiple years of historical sales data, geophysical data, trucking rates, and site sales variability (leading to safety stock requirements) for the company’s North American region.

As part of the study, multiple scenarios were constructed and then optimized in order to obtain a total operating cost assessment. These same scenarios were modeled from a customer fill rate and delivery time perspective.

The results were presented to the executive management as part of the company’s constant productivity initiatives.

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Order Sourcing Management

Our client had a two-fold challenge:

  • Define the optimal way to fill an order to a customer so that the customer’s order was shipped one-time complete
  • Ensure that the forecasting process put the right inventory into the right place

This particular client had a complex distribution network consisting of multiple distribution centers, along with a substantial number of stocking manufacturer’s rep locations.

Additionally, the company had a varied mix of high volume stocking items, mid volume ‘manufacture-to-build’ and ‘assemble-to-build’ products originating from a set of globally located factories.

Furthermore, specific product distribution constraints and customer requirement constraints existed. These constraints were difficult to manage in a distributed network.

As a result of this complexity, fill rates suffered and freight costs increased. The rapid rate of product and corporate acquisitions further exacerbated the problem.

Rastel was engaged in order to analyze the problem, propose solutions and deliver the solutions. In a sentence – ‘Increase the fill rates‘.

Through a process of analysis, concept validation, design/development, training and deployment, Rastel successfully aided the company in substantially improving their fill rates.

Fill rates increased, on average, 12 points when measured in the most difficult manner: “The order shipped complete from one site in one shipment”.

Get in touch

Phone

1-207-389-6203

Email

contact|at|rastel.us