In today’s increasingly omnichannel marketplace, manufacturers, retailers, and ecommerce companies alike are looking for new ways to get products in their customers’ hands faster without breaking the bank. In fact, consumers’ desire for low-cost, two-day delivery (rather than ultra-rapid delivery) is currently an area of focus for many supply chain executives, according to the 2015 “State of the Retail Supply Chain Report.”
Many companies are finding that taking a strategic approach to distribution network configuration can help them achieve that goal. Establishing an optimal distribution center network can help to accommodate unreliable customer forecasting and changing business needs while increasing efficiency and controlling costs.
Ready to take a closer look at your network? Consider these five tips:
1. No Cookie Cutters Here. The optimal network configuration will be different for every company. It depends on a variety of factors including order volume, product characteristics, and acceptable transit times. Today, many companies use multiple “deliver-from” locations to serve omnichannel customers. The key is to establish the right blend to accommodate your business goals.
2. Do Your Homework. Learn what is most important to your customers, so you can align your service solutions with their priorities. Understanding customers’ expectations for delivery, for example, can help to guide the site selection process. Is it important to be within 12 hours of customers or is a two- or three-day transit time viable? That may determine if you need a network of DCs or just one or two in strategic locations.
3. Location, location, location. Consider the appropriate proximity of potential DC locations to customers, sourcing, manufacturing, ports, major interstates, etc. Assess how service levels would be impacted if changes are made and identify opportunities for freight savings. With strategically located DCs, it is possible to reach more than 98 percent of the U.S. within two business days via ground service – helping to significantly reduce transportation costs.
4. Find value in postponement strategies. Delaying product configuration until last possible minute often gives companies great flexibility to be responsive to customer demand. From assembling rainbow packs to formatting computer hard drives, performing product customization as close to the customer as possible helps to improve inventory control, increase speed to market, and offers opportunities for transportation savings.
5. Ask for help. Many companies find that a third-party expert can be a valuable ally in the network configuration process thanks to their flexible resources, economies of scale, fresh ideas and knowledge of best practices. They likely have an existing network of facilities that could allow you to get up and running in a new location quite quickly – or be willing to invest in a facility that fits the bill.
At Saddle Creek, we have worked with numerous companies to customize a DC network that suits their unique needs – often in as little as six months. We are continually expanding our nationwide network with new facilities in markets across the country, including our newest facilities in Lakeland, Fla., Fort Worth and San Diego.
Learn more about how our strategic approach to network optimization can help you enhance service levels, improve inventory control and reduce costs.
1The State of the Retail Supply Chain: Essential Findings of the Fifth Annual Report. Auburn University and the Retail Industry Leaders Association (RILA). March 2015. Pg. 11.
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