Blog Posts How Can Your DC Network Help Cut Transit Time and Cost?
Key Takeaways:
- The majority of consumers now expect fast, free shipping.
- To ensure they’re able to meet shoppers’ delivery expectations, retailers and brands should take a strategic approach to their distribution network.
- Moving products closer to customers can often help to reduce transit time and cost.
Today’s shoppers have high delivery expectations for their ecommerce orders. In fact, two-thirds of consumers expect free shipping on every online purchase, according to a recent JungleScout survey. Speed is also important. The majority of consumers (68%) also expect online orders to arrive in three days or less.
As retailers and brands strive to satisfy their customers’ heightened delivery expectations, many are recognizing the critical role their distribution network can play. Saddle Creek Logistics’ 2021 Distribution Network Trends Report explores factors to consider for optimal network configuration, as well as best practices in warehousing and transportation management and more.
Following is an excerpt…
Distribution Network Trends Report
Today, more than ever, companies are looking for ways to improve service levels, better manage inventory and reduce transportation costs. It’s no accident, then, that both B2B and B2C businesses are taking a more strategic approach to network configuration. Distribution networks play a critical role in the supply chain.
“The benefits of finding the optimal DC network are controlling costs and providing faster service/deliveries. That’s important for omnichannel and ecommerce, but also for any logistics operations that need to serve multiple geographic locations,” explains Tom Patterson, Executive Vice President of Operations, Saddle Creek.
Finding the Optimal Configuration
Every company will have its own ideal DC network configuration based on company size, type, variety of sales channels, geographic distribution, etc. For example, omnichannel and ecommerce companies are more likely to have more DCs because they can provide faster, more cost-effective service when they’re in their customers’ backyard.
The design and management of these networks should be assessed on an on-going basis. The network is likely to change over time as the business grows and evolves.
To determine the ideal number of distribution centers for a business, it’s important to consider a variety of factors including order volume, product characteristics, reverse logistics needs and acceptable transit times. Data analysis and modeling can be valuable in the decision process.
Today, as more companies move toward an omnichannel environment (or simply need to accommodate sales growth and market expansion), they opt for multi-node networks that put products closer to their customers.
According to Logistics Management’s November 2020 Warehouse/DC Operations study, the number of buildings in DC networks is on the upswing – with 46 percent of respondents having three or more buildings, up from 36 percent in 2019. In addition, 17 percent of companies with plans for DC expansion intend to add more buildings in their network.
The benefits of finding the optimal DC network are controlling costs and providing faster service/deliveries. That’s important for omnichannel and ecommerce, but also for any logistics operations that need to serve multiple geographic locations.”
– Tom Patterson, Executive Vice President of Operations, Saddle Creek Logistics Services
Selecting Strategic Locations
When it comes to site selection, low operational costs and readily available inbound/outbound transportation should be key considerations. It also can be helpful to consider proximity to customers, sourcing, manufacturing, ports, major Interstates, etc.
When choosing a geographic location that is best for warehousing and distribution facilities, it is important to keep in mind unique business objectives.
“For example, if fast, free shipping is a service priority, strategically located DCs make it possible to reach more than 90 percent of the U.S. within two business days via ground service,” Patterson explains. “That helps you meet consumers’ expectations for delivery speed while significantly reducing your transportation costs.”
Read the whitepaper to learn about other opportunities for improvement related to warehousing, transportation and general operations.
