Supply Chain Optimization
The client was a leading manufacturer of snacks in the United States and they operated a hybrid distribution model with 125 warehouse locations. Network and delivery costs were increasing and customer constraints were making the system difficult to manage. The assignment was to analyze the value chain, identify cost savings potentials, and recommend the optimal distribution network for the future.
ILLUMINATE
The project approach was designed to explore and answer 4 questions:
- What are the benefits of the current network strategy?
- What operational and logistics cost savings opportunities exist?
- How do current activities compare to industry best practices?
- What are the impacts and risks of potential changes (service, people, skills, product quality, etc.)?
NAVIGATE
A detailed cost analysis of each step in the supply chain was conducted. With this illumination, best practices were integrated to identify potential impacts. Scenario analysis was done to determine optimal financial performance and service delivery excellence. Set up and transition costs were considered as well. In close partnership with the client, an optimal recommendation was developed and presented to management.
ACTIVATE
A fact based financial analysis of the current and recommended network plan was developed. The client was able to move from 125 inventory and distribution locations to 105, reducing a significant amount of capital invested in inventory. A path to savings of +10% of network spend was laid out based on industry best practices.
Results
First year annual savings amounted to $5 million while continuing to meet the service requirements of customers.
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