Stationery & Office Products
Client: Stationery & Office Products Distributor
Background
Our publicly listed client operates a national wholesale and retail distribution network. The network operates with warehouses in each state and has evolved through a combination of organic growth and acquisition. Senior management suspected there were opportunities to rationalise their distribution network and improve working capital without compromising the customer experience.
Challenge
A project was commissioned to determine the following:
- the optimal network structure and flows
- a property strategy to deliver that and
- the phased supply chain transition plan detailing what changes should be made to the distribution network over the next five years
Approach
Define:
- The current network structure , flows and costs
- The potential network scenarios that needed to be assessed
Make recommendations for:
- The optimised distribution networks for each network option proposed
- The optimised transportation routings associated with each network
- The inventory holdings and flows and
- The property footprint including warehousing and cross dock facilities
Determine:
- Total costs and benefits of each scenario and
- The steps required to achieve them
Outcome
Immediate opportunities:
- Annual distribution network savings of $7.9 million (7% of operational costs) whilst meeting current customer delivery time performance
- Transportation network annual kilometre reduction from 48 billion to 42 billion kilometres (11.5%) providing both an economic and environmental benefit
Further Opportunities exist to:
- Reduce the current level of Inventory Investment ($103 million) by at least 30% and maintain the existing customer service experience goals through the use of statistically determined safety stock levels and re-order quantities as well as changing forecasting techniques & processes
- Reduce the COGS by instigating factory gate initiatives collaboratively with suppliers and utilising the optimised distribution network
