Parts distribution network strategy

Challenge

A private-equity backed distributor of truck parts had recently acquired a similar company – but the two distributors employed opposite distribution strategies, one centralized and the other decentralized. Management’s challenge was to determine how best to serve the combined businesses’ customers across the United States.

Approach

• Logistics baseline: Established a consistent database of sales, service, inventory, warehousing cost and transportation expense across both legacy businesses.
• Network modeling: Built a network analysis model to represent various distribution strategies and their impact on cost, inventory and service.
• Strategy development: Recommended a phased approach to deliver attractive savings via a rational series of steps.
• Implementation assistance: Played an interim supply chain management role in conducting detailed analyses, planning execution and helping lead change.

Results

• Identified a conservative opportunity for $2.7 million in annual operating cost savings while providing more effective fulfillment.
• Delivered savings from closing one facility, drafted the business case for central DC expansion, and conducted detailed planning for network re-balancing across the US.
• Supported strengthening of the company’s own supply chain management capabilities.