The Challenge:
This client planned to double its revenue over the next five years through organic growth and expansion into new markets. They recognized the need to build additional supply chain capabilities and infrastructure that would allow them to achieve their long term strategic objectives. This would require distribution capabilities to support various internal initiatives, such as the company’s new e-commerce strategy for B2B & B2C, as well as a number of new business ventures they were planning.
The Auxis Approach:
Auxis was engaged to provide our distribution system design expertise and determine the supply chain infrastructure necessary to support future growth in markets, products, capabilities and geographies.
Auxis performed a distribution network optimization study focused on minimizing transportation and warehousing costs, while satisfying customer service and demand requirements. The study analyzed the tradeoff between service levels and costs, with the objective of defining the optimal network configuration (locations, sourcing strategies, etc.).
Auxis facilitated a series of meetings with the client’s management and subject matter experts to understand the current distribution network, business processes and operational practices. These interviews focused on understanding the client’s current supply chain operations profile, including distribution strategy, customer base, product flows, transportation requirements and desired customer service levels.
Then, using an advanced network optimization modeling tool, Auxis worked with the client to define and model various operating scenarios. As part of the Auxis deliverables-focused project planning and management process, we provided valuable, effective data for this client, including documentation that defined scenarios and a comparative analysis summarizing the results of each scenario run. In addition, Auxis developed a space and capacity analysis that uncovered the potential bottlenecks in the client’s distribution network if they continued to grow sales and product offerings as planned.
In the last stage of the project, Auxis worked with client management to review the alternatives and determine the best network approach to support the client’s current and future business requirements.
Auxis’ well established methodology, as well as our extensive knowledge and experience determining requirements for distribution capability, capacity, and designing distribution networks enabled us to determine a clear business case for this client. We provided a highly effective plan for implementation that would support the recommended outcomes, based on defined key financial and operational drivers.
The Results:
The results of the study not only uncovered a potential $1.8 Million dollars in network savings, but equally important provided the client’s senior management team with a strategic roadmap to support the growth projections. The results also allowed the executive team to form a consensus on how and where to invest in this strategic initiative along with focused priorities. Additional outcomes that resulted from the study included:
| |
- Established an agile and scalable distribution network model for long term growth and profitability.
- Positioned the appropriate level of infrastructure in a time phased approach taking into account capacity restrictions. This included analyzing the benefits of centralizing activities such as returns, B2C, etc.
- Met or exceeded service to customers while ensuring a cost effective solution. This included reassignment of customers to DCs and shifting transportation modes.
- Build additional facilities that would allow for ‘tactical’ and ‘strategic’ growth, relieving the existing distribution centers.
|
About Auxis
Auxis is a management consulting and outsourcing firm that creates value by enabling growth for its customers. We work with top management to develop and implement robust business models that generate superior business performance. Our core belief is that success is measured by the ability to deliver practical, measurable and sustainable financial results. |
