The importance of an efficient Distribution Network

The market where Companies operate is characterized by extreme attention to the service level delivered to the Customer while, at the same time, to reduction of logistic costs. Therefore, it is not surprising that a rational, updated and efficient Distribution Network is considered a key element for success. The distribution network, the right allocation of stock along the network, the design of warehouses, the planning of transportations shall guarantee the optimal cost to reach the performance goals, now often of "top" level, suitably combining organization and technology.

 Main areas of intervention:

  • Checking the congruity of the service level of the present distribution network (by assessing the degree of satisfaction of customers and the positioning towards competitors) compared to the logistic costs related to it (warehouse, stock, transport costs), determining the values of the main performance indicators (creating them, if absent);
  • Designing the best distribution network: checking the opportunity to create a multi-level distribution network by determining the role, number, dimension and best location of the logistical nodes (warehouses, distribution centers, cross docking platforms, etc.), comparing alternatives also in terms of infrastructural investments;
  • Improving the stock management policies through the analysis of the involved business processes (Sales & Operations Planning), the used tools and the obtained operational results;
  • Convenience analysis to introduce a software to optimize distribution (demand forecast, stock optimization, delivery planning, transport cost control and optimization, etc.) and assistance to its implementation;
  • Analyzing the traffic flows, redefining routes and deliveries using advanced mathematical algorithms developed with specific optimization software tools
  • Determining the saturation levels of vehicles and defining the best loading methods;
  • The advantage of “make or buy” choices in the Logistics Management and transport, selecting Third Parties and giving assistance to tenders;
  • Analyzing and assessing contracts in force and determining the price structure and the best contractual model also in view of the most recent regulation developments;
  • Designing and installing instrument panels conceived with Business Intelligence techniques to control the distribution KPI;
  • Training and supporting the Human Resources involved in the distribution and logistical processes, defining their role and duties within a wider organizational framework aiming at obtaining better levels of efficacy and efficiency.

the method

Analysis of the present network

The present distribution network is mapped out identifying number, functions and role of the logistical nodes and the main sources and destinations of the goods flows. The costs of housing (storage), handling (handling and order preparation), stock (financial costs and costs relevant to the possession of the goods), transport (primary and secondary costs) and administration are quantified. The analysis is completed also with the comprehension of the service policies and the definition of the risks involved in the present network.

Definition of the optimal network

Strategic, technological and organizational options are defined to eliminate the weak points and reach levels of excellence. Alternative solutions are analyzed (even using complex information tools) and described in detail in terms of results that can be obtained, budget, and return on investment, running costs, operational flexibility, realization times and risks.

Project realization

The actions aiming at obtaining and consolidating the improvements determined in the previous steps as well as the priorities and timing to transform the network are carried out; the Work Group is started, organized and supported. The best levels of stock are defined, each single warehouse is designed according to its role within the new network and the transports are optimized by defining again routes and rates.

Monitoring of the results

Periodical checks of the network status through auditing techniques (stock, warehouses and transports).

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