Supply Chain Network Optimisation 6

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

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Testimonials

"GRA's insight and experience helped us identify the biggest financial opportunities and where our efforts should be focused to successfully execute our strategy and deliver substantial operational improvements."

– Brett Kelly, National Supply Chain Manager, Officeworks

Typical results

  • 20-40% inventory investment reduction
  • increased service levels ranging up to 99.9%
  • 10%-15% reduction in supply chain operating costs
  • 5%-20% spend management savings
  • the ability to fund business initiatives from operating cash flow (OCF) improvements
  • improved return on capital employed (ROCE)
  • a minimum 3:1 ROI (10:1 to 30:1 typical)