Blog Posts What Can Your DC Network Do for You?
- Many retailers and brands are reevaluating their distribution networks.
- Moving products closer to the end customer can help to improve service and control cost.
- The best network configuration aligns with strategic business objectives.
As today’s retailers and brands look for ways to navigate ecommerce growth, rising parcel costs and supply chain disruptions, many are taking a careful look at their distribution networks.
In a recent conversation with Digital Commerce 360, Perry Belcastro, Senior Vice President of Fulfillment at Saddle Creek, explained the importance of finding the right DC network configuration.
Following is an excerpt…
Designing the Right Distribution Network for Today’s Marketplace
DC360: What’s driving the need for network expansion?
PB: Simply put, it’s service and cost. By adding distribution centers (DCs), you can move products closer to your end customers to minimize transit time and cost. For retailers and brands that support both B2B and direct-to-consumer (D2C) fulfillment, it can be helpful to add micro-distribution centers so products can be picked, packed and shipped without causing congestion in stores.
Utilizing multiple DCs can also help to mitigate supply chain risk. Distributing inventory across facilities in different geographic areas instead of housing an entire inventory in a single DC allows for more fulfillment options.
Multiple locations also give you options in a challenging labor market. If labor is particularly tight in one area, you might temporarily shift order volume to another facility to avoid downtime and control costs.
Utilizing multiple DCs can also help to mitigate supply chain risk. Distributing inventory across facilities in different geographic areas instead of housing an entire inventory in a single DC allows for more fulfillment options.”
– Perry Belcastro, Senior Vice President of Fulfillment, Saddle Creek Logistics Services
DC360: How do you determine your optimal network configuration?
PB: When optimizing your network, consider your company size, product type, number of sales channels and geographic distribution. Be sure to keep your strategic business objectives in mind as well.
If offering fast, free shipping is a priority, for example, you’d want a network that allows you to deliver that service level as cost-effectively as possible. With two or more strategically located DCs, you can reach more than 90% of the U.S. within two business days using ground service.
Many companies opt to have one facility on the East Coast and one on the West Coast or in a central location based on the U.S. population like Ohio, Kentucky or Indiana. A growing number of companies have three or more distribution nodes.
To learn what factors to consider when selecting an optimal site for a DC, read the full article on page 53 in Digital Commerce 360 (registration required).DC Network Configuration, Managing Growth, Mitigating Risk, Selling Online