Supply Chain Consulting

Supply Chain Consulting: Distribution Network Design Case Study

supply chain consulting A global life sciences company was challenged with high freight costs, high inventory levels and complex processes, delays due to over-processing, and overall lack of delivery consistency. The distribution centers were not serving a strategic function, warehouse operations lacked experience, and the company as a whole lacked a corporate wide concept of operational excellence. Many products were typically on backorder, and the restructuring of several locations and systems had caused major disruption in the last six months.

The client turned to LeanCor to conduct a supply chain consulting project that developed an optimized logistics network. The goal was to service the customer with >98% perfect order in two days consistently. The client would realize a reduction in lead time, inventory, and cost; as well as improve working capital, customer satisfaction, speed, quality, flexibility, and visibility. Ultimately, LeanCor would create a logistics network strategy based upon a data-driven, comprehensive overview of total logistics costs (including warehouse, labor, and freight). This strategy would serve as a foundation for the client to continue its fast-paced growth while improving satisfaction, margins, efficiency, and competitive advantage.

LeanCor’s Lean Deployment team of consultants and engineers provided the following solutions for the supply chain consulting project:

  • Custom total logistics cost tool for client network simulations:
    • Included transportation cost, facility cost, employee cost, inventory carrying cost, and transition cost. LeanCor developed maps to show distribution coverage of their current carrier (UPS) with the different scenarios.
  • Sensitivity analysis for total logistics cost and weight:
    • Showed robustness of the results if changes in the current packaging methods were deployed.
  • Step-by-step roadmap to guide transition from current state to the proposed future state:
    • Included a Failure Modes and Effect Analysis (FMEA) for each step.
  • RASCI to show which facilities should perform which functions
    • RASCI – Responsible, Accountable, Supportive, Consulted, Informed

Deliverables for the supply chain consulting project included a current state overall validation. LeanCor provided:

  • Visual representation of the supply chain network, raw material / product flow, and information flow
  • Total logistics distribution cost model and logistics network analysis
  • The client also needed to understand how its inventory strategy aligned with the network analysis.
  • The client also needed to understand how its inventory strategy aligned with the network analysis.
  • The client also needed to understand how its inventory strategy aligned with the network analysis.

The client also needed to understand how its inventory strategy aligned with the network analysis. LeanCor provided:

  • Network options (number of locations and air/ground freight utilization)
  • Optimal number and locations of facilities
  • Road map for implementation (both quick wins and long term successes)
  • Developed freight route policies
  • Analysis of 3PL management outsourcing options
  • Roles and responsibilities matrix

The supply chain consulting project resulted in an estimated $3.7 million in logistics cost savings over five years (~9-10% savings from current costs). Other results included a reduced number of distribution centers from six to four (33% reduction), while improving the customer fill rate.

In summary, LeanCor reduced the complexity of the client’s distribution network while increasing customer coverage and decreasing logistics cost.

LeanCor Supply Chain Consulting

Today’s complex supply chains require vision, strategies, and innovative techniques to create optimal performance. LeanCor Consulting is a trusted partner for implementing end to end supply chain performance. Global organizations leverage LeanCor Consulting to develop vision and strategy deployment plans for improvement in all supply chain functions. We focus on elements of speed, cost, quality, and delivery, and are able to develop innovative solutions from operational experience as a third party logistics partner.

When you partner with LeanCor, you receive tangible results such as total logistics cost reduction, working capital improvements, optimization of material and information flow, and process improvement leading to supply chain visibility and velocity.

To learn more, visit: http://www.leancor.com/supply-chain-consulting/

 

Posted by LeanCor Supply Chain Group

LeanCor Supply Chain Group is a trusted supply chain partner that specializes in lean principles to deliver operational improvement. LeanCor’s three integrated divisions – LeanCor Training and Education, LeanCor Consulting, and LeanCor Logistics – help organizations eliminate waste, drive down costs, and build a culture of continuous improvement.

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