Insight Into Redesigning Your Distribution Network …...Distribution strategy defines how we move...

All Rights Reserved, MWPVL International Inc., 2010

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MWPVL International

Supply Chain | Experience

Insight Into Redesigning Your Distribution Network Strategy

Presented by:

Marc Wulfraat

President

MWPVL International


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Agenda

Topic

Distribution Network Strategy - Overview

Insight into Redesigning a Distribution Network Strategy

Key Takeaways

Distribution Network Strategy Overview


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Execution

Suppliers

Planning

Raw Materials Processing

ProductionDistribution, Wholesale,

Retail

Transportation Store Consumer

Distribution strategy defines how we move goods to market.

Regardless of company size or industry, every company

participating in the global supply chain has some form of

distribution strategy.

The question is how effective and flexible is that strategy?

Distribution Strategy Impacts All Supply Chain Participants


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For which suppliers should

we manage & integrate inbound

freight?

Which transportation

modes & partners should we use

from each site?

How can we consolidate and

optimize our freight

For a given set of shipments, what

are the best routes?

What strategies can we use to

minimize carbon footprint?

How many distribution

centers do we need? Where

should they be?

What markets should our

facilities serve to optimize service

levels?

What should our stocking strategy

be?

How can we optimize global and domestic

supply chain costs

How do we reduce working

capital in our distribution

infrastructure?

When and why should we use

contract manufacturing?

Which products should be

produced at which plants?

Where should our plants be located

globally and domestically?

Should our plants be in the same locations as our

distribution?

How do we balance

production versus inventory ?

Which countries / suppliers / sites

do we from?

Which distribution

channels should we source through?

How can we lower our net landed cost of

goods?

How much inventory should

we be holding?

What products should we

insource versus outsource?

Supplier Sourcing /

ProcurementManufacturing Distribution Transportation

Distribution Strategy Shapes All Aspects of Supply Chain Behavior


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Operating Expense &

Working Capital

ServiceLevel

Distribution Network Optimization - The Great Balancing Act


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Main Drivers of Distribution Network Optimization

Mergers and acquisitions

Business growth or downsizing

Competitive pressure to reduce labor expense through near-shoring or off-shoring

Drive to increase efficiency by reducing logistics operating expenses

Pressure to reduce working capital tied up in inventory assets and/or infrastructure

Changes in customer service level requirements

New market opportunities

Changes in supply or customer base

Increases in fuel / transportation costs

Insight into Redesigning a Distribution Network Strategy


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Business Assessment & Data Collection

Phase 1

Model Baseline Scenario “As Is”

Strategy FormulationModel Alternative Scenarios

Transition Planning & Implementation

Phase 2 Phase 3 Phase 4

Data Gathering Model Baseline Scenario “As Is”

Model Alternative Scenarios Develop Implementation

Road Map

Project Kick-Off

Define Project Scope.

Deliverables, Schedule,

Resources, Team

Develop Data Gathering

Requirements

Facility Tours & Interviews

Assessment of Data Availability

and Accuracy

Build Econometric Financial Model

Construct & Simulate Baseline Scenario

Calibrate Baseline Model to Actual

Spending

Develop Infrastructure

Assumptions & Constraints

Identify Carbon Footprint

Define Main Scenarios to Evaluate

Develop Financial Model by Scenario

Determine Operating Expenses by Scenario

Simulate Inventory Assets by Scenario

Determine Capital Expenditures by

Scenario

Determine Transition Expenses by Scenario

Select Finalist Scenarios to Evaluate

in More Detail

Carbon Footprint

Define and Evaluate Hybrid Scenarios

Select Final Optimized

Distribution Network Address IT, Tax,

Legal, Infrastructure Issues

Risk Analysis and Qualitative Issues

Develop Transition and Implementation

Road Map Plan

Identify Resources, Timeline. Funds,

Structure, Constraints, Partners,

Stakeholders, Communication

Strategy

Distribution Network Redesign & Optimization4-Phased Project Methodology To Be Adapted to Specifics of Each Project


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Key Activities Deliverables

Project Set-Up

Mobilize Project and Understand Strategic Objectives

Project Kick-Off Site Visits / Facility Tours Interviews With Key Stakeholders Establish Goals & Objectives, Project Deliverables,

Customer Service Requirements, etc. Determine Project Plan, Schedule, Internal & External

Resources, Stakeholders, Communication Strategy

Project Blue-print Preliminary Project Scope

& Objectives

Data Collection

Assess, Cleanse and Validate Available Data

Data Gathering, Data Validation, Data CleansingMerge Financial Data With Operating Data Review and Resolve Data-Related Issues

Project Database Cleansed, Validated and Prepared for Remaining Analytics

Business Profiling

Establish Preliminary Scenarios to Pursue

Formulate Preliminary Direction of the Project Establish Software Modeling Tools and Data

Aggregation Strategy to Use for the Project

Preliminary Project Direction to Be Revised in Subsequent Phases

Capacity ConstraintsDetermine Existing Infrastructure Constraints

Determine the Capacity Constraint of Each Facility to Identify Where and When Existing Infrastructure Requires Capital in the Existing Network

Definition of Existing Network Constraints

Project Approach - Phase 1 Business Assessment and Data Collection



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Phase 1: Business Assessment

Identifying key business issues up front will shape how the study is conducted

Site visits, interviews and a structured data gathering effort are needed to identify key drivers for the study

What is your company’s business strategy vision?

Where do consolidation /expansion opportunities exist?

What are constraints or barriers to success?

Are changes to customer service requirements expected or permitted?

What essential customer service level requirements must be satisfied by a supply chain strategy?

What is the competitive landscape and how is this anticipated to change?



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Item/Part Master File

• SKU number, Description, Family, COO

• Unit Movement and Inventory History

• Unit of Measure, Length, Width, Height, Weight

• Material Handling Characteristics

• Cost of Goods

Vendor Master File

• Vendor Location

• SKUS Supplied

• Purchase Order History

• Inbound Freight Charges / Terms

Customer Master File

• Customer Location

• Order / Invoice History & Order Detail

• Service Requirements

• Growth Projections

Transportation File

• Inbound Transportation History

• Outbound Transportation History

• Inter-Facility Transfer History

• Tariff Rates

• Shipment Cost Details

Production / Distribution Facility File• Production & Distribution Center Locations With

Lease/Own Details

• Storage Location Master File

• Capacity Constraints (Storage, Throughput)

• Labor Crewing / Productivity

Financial Accounting Files

• Operating Expenses at GL Level (Budget, Actual)

• Depreciation Rates & Schedule, Tax Rates, Project Accounting Methodology (IRR, ROI, NPV, EVA)

• Hurdle Rates

Phase 1: Data Gathering

Data gathering - accurate operational and financial data are required for a network study



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APRIL JUNE JULYMAY AUG, SEP, OCT

Business Requirements

Interviews

Data Gathering / Analysis / Validation

Econometric Modeling : Business Case & Impact

Assessment

Phase 4 - Execution

Phase 2 – Baseline Scenario

•Additional Scenarios

•Implementation Plan

•Develop Road Map

•Operating Model

• “Quick Hits”

• Detailed Facility Design

•Performance Tracking

Model

Scenario Concepts

Alternate Network Modeling

Formulate Optimal Supply Chain Strategy to Support

Business Strategy

Baseline Simulation

Hybrid Scenario

Sensitivities

Phase 1 - Project Kick-Off Post-Strategic Study

Project Activities

Typical Network Strategy Study Project TimelineIllustrative Example

Phase 3 – Alternate Scenario

Transition Planning & Implementation



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Typical Project Team Structure

Executive Sponsor

Project Leadership

Project Team

Consultants / Internal Resources

Steering Committee

• Finance• Procurement• Customer Service• Information Technology

• Production• Distribution• Transportation• Human Resources• Real Estate



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Set-Up Benchmark Scenario

Develop a Network Model To Simulate Business Operations in the “As Is” Context

Input Key Model Data Requirements to Simulate Existing Network “As Is”

•Transportation•Warehouse•Production• Inventory•Fixed and Variable Operating Expenses•Capacity Constraints

Project Operating Expenses, Capital Requirements and Inventory Assets On An Annual Basis into the Future

Baseline Scenario Supply Chain Network Model

Baseline Scenario Validation

Assess, Cleanse and Validate Baseline Scenario and Data Issues

Compare Baseline Scenario Predictive Results to Actual Financial PerformanceFine-Tune Assumptions and Refine Data Gaps to Obtain Required Level of Confidence (e.g. ± 2.0%)Management Review and Approval of Supply Chain Network Model Validity

Validation of Supply Chain Network ModelSign-Off and Approval of Baseline Validity

Define Alternate Scenarios

Finalize Alternative Scenarios to Study

Team Review of Proposed Scenarios and Hybrid Scenarios to EvaluateConsensus on Project DirectionRefine Scope of Project Based on Established Direction

Sign-Off and Approval of Scenarios to Pursue and Project Direction

Project Approach - Phase 2 Model Baseline Scenario “As Is”



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Supply chain optimization tools require some form of data

aggregation to reduce large datasets into workable files; e.g.:

Data aggregation is an analytical technique that enables

efficiency at the expense of some accuracy and this trade-off

need to be done so as to minimize uncertainty

SKUs

• 12 Months Daily Shipment History at line level

• Raw Item/Part Data

DC/Plant

• Aggregate Movement History by Plant/DC

Family

• Aggregate Movement History by Product Family

Customers

• 12 Months of Shipment Data at customer level

3-Digit Zip Codes

• Aggregate Demand to 3-Digit Zip Code

MarketArea

• Aggregate Demand to Market Area

Phase 2: Data Aggregation Strategy



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Phase 2: Product Aggregation Examples

Item Master File

Material Handling Characteristics

• Bulk Floor Pallet Storage

• Full Case Rack Storage

• Split Case Flow Rack/Shelf

• Conveyable

Length, Width, Height, Weight

Material Handling Characteristics

Product Family / Class

Product Velocity Ranking

Cost of Goods

52 Weeks of Sales History

52 Weeks of Inventory History

Sales Channel

Import / Export / Country of Origin

Seasonality Index

Returns Requirements

Freight Class

Hazardous / Control Requirements

Primary Vendor / Source of Supply

Velocity-Based

Stocking Strategy

• Forward Deploy Fast Movers

• Rear Deploy Slow Movers

• Based on order lines, cube, weight

To Model

Distribution Center

Labor Requirements

To Model Different

Stocking Strategies

Transportation Inbound &

Outbound

• Import Versus Domestically

Sourced SKUs

• Export SKUs

• Inbound Freight by Vendor

To Model Different

Transportation

Strategies



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Phase 2: Software Tools

Depending on the nature of the project and the supply chain vertical there are multiple optimization tool(s) available

Database software may be needed to analyze large datasets:

SQL Server/ SAS/ Microsoft Access

A Few Optimization Tools:

IBM LogicNet Plus XE

i2 Supply Chain Strategist

Infor CAPS Supply Chain Designer

MicroAnalytics OptiSite

Insight SAILS

Barloworld / CAST

SimFlex

LLamasoft, Inc.

Optiant

ToolsGroup



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Baseline Cost Comparison

Cost Element

Actual 2005

Cost

Baseline

Model Cost

Baseline

Variance

Percent

Variance

Transportation

Replenishment (inbound) $583,700 $589,670 $5,970 1.02%

Outbound $2,672,391 $2,887,562 $215,171 8.05%

Total $3,256,091 $3,477,232 $221,141 6.79%

Facility

Fixed $798,339 $798,339 0 0.00%

Variable $913,876 $913,676 (200) -0.02%

Total $1,712,215 $1,712,015 (200) -0.01%

Phase 2: Example of Baseline Scenario Calibration The Model’s Simulation Results are Compared to Actual Financials

Operating data and financial data are combined for a common time period and the network optimization software simulates historical operations until the delta between the model’s simulated results and actual results are deemed acceptable –you should aim for a ± 2.0% delta



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Analyze Alternative Scenarios

Simulate Alternative Distribution Network Scenarios and Hybrid Scenarios

Run Simulations of Each Alternative Scenario toIdentify Operating and Financial Results by Scenario

Develop Econometric Financial Model to Provide the Complete Cash Flow Story by Scenario Including Capital Expenditure Requirements, Inventory Assets, Recurring and One-Time Expenses

Establish Carbon Footprint of Each Scenario

PreliminaryOptimized Supply Chain Network Model

Refine Optimal ScenarioSensitivity Analysis With Hybrid Scenarios

Run Analytics on Key Sensitivity Criteria (e.g. Labor Rates, Fuel Costs, Growth Rates, etc.)

Refine Optimal Scenario Analysis of Hybrid Scenarios

Refined OptimalSupply Chain Network

Real Estate AssessmentMarket Analysis for Labor, Land, Buildings, Taxes...

Identify Key Market Inputs Required to Provide Accurate Scenario Modeling Including: Real Estate and Labor Availability & Costs, Disposal Value of Existing Assets, etc.

Location Assessment

Assessment of Business IssuesRisk Analysis and Assess Qualitative Factors

Perform Assessment of Key Risks and Economic Drivers

Evaluate Qualitative Issues and Constraints Including Legal, Technology, Real Estate, HR, etc.

Final Report and Recommendationsto Senior Management

Project Approach - Phase 3 Strategy Formulation : Modeling of Alternative Scenarios



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Phase 3: Modeling Alternate Scenarios

Supply chain network optimization studies typically involve an iterative process:

Define a scenario to evaluate based on collective wisdom

Analyze the scenario and obtain first-pass results

Refine the results to assess constrained and unconstrained networks

Refine optimal network to evaluate sensitivities and key economic drivers

Migrate optimal scenario into econometric model



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Forecast Received on June 6, 2006 with a 40% Inventory Growth Factor

Run Name Baseline 22 18 17

Year 2005 2010 2 DCs - Cleveland & LA 2010 2 DCs - Cleveland & Reno 2010

DC Name(s) Cleveland

Cleveland -

New Cleveland 40' LA 40'/20' Total Cleveland 40' Reno 40'/20' Total

DC

Volume 51,653 117,980 81,389 36,591 117,980 87,252 30,728 117,980

DC Storage

Area (sq. ft.) 45,000 93,320 90,372 44,551 134,922 96,369 38,554 134,922

Adjusted Fixed

Cost $798,339 $1,655,993 $1,603,675 $664,075 $2,267,750 $1,710,092 $328,391 $2,038,483Non-Space

Related

Carrying Cost $487,459 $1,109,660 $1,071,706 $404,728 $1,476,434 $1,148,908 $194,216 $1,343,124

DC Variable

Cost $913,676 $2,095,325 $1,427,563 $701,084 $2,128,647 $1,530,400 $553,411 $2,083,811

DC Cost $2,199,474 $4,860,978 $4,102,944 $1,769,887 $5,872,831 $4,389,400 $1,076,019 $5,465,418

Inbound/

Replen Cost $1,523,247 $4,144,637 $2,400,162 $940,023 $3,340,184 $2,573,061 $923,069 $3,496,131

Outbound Cost $2,672,391 $6,272,830 $3,599,862 $1,665,809 $5,265,671 $4,119,488 $1,247,527 $5,367,015

Trans Cost $4,195,638 $10,417,467 $6,000,024 $2,605,832 $8,605,855 $6,692,549 $2,170,596 $8,863,146

Total Cost $6,395,112 $15,278,445 $10,102,968 $4,375,719 $14,478,686 $11,081,949 $3,246,615 $14,328,564

Cost vs.

Cleveland New - - - - ($799,759) - - ($949,881)

A combination of graphical and analytical outputs are generated by supply chain

optimization tools

Phase 3: Sample Scenario Outputs



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Phase 3: Econometric Financial Modeling

Distribution network optimization should always include detailed financial modeling otherwise the results may be challenged

Accurate portrayal of the timing of all cash flow requirements for each scenario including:

Logistics & production operating expenses

Capital investment requirements into infrastructure, depreciation & tax shield

Inventory assets & cost of capital

One-time transition expenses, tax breaks, etc.

Configurable sensitivity analysis that rolls up to an executive summary for your preferred accounting measurements (IRR, NPV, ROI, EVA)



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1st Half 2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

0 1 2 3 4 5

Incremental Revenue / Reduced COGS -$ 137,214$ 139,591$ 141,644$ 144,444$ 148,553$

Ongoing Expense Savings -$ 869,385$ 882,112$ 895,822$ 916,309$ 944,776$

Depreciation -$ (22,675)$ (22,675)$ (22,675)$ (22,675)$ (22,675)$

Amortization -$ -$ -$ -$ -$ -$

Asset write-off (140,635)$ -$ -$ -$ -$ -$

Initial one-time expense (852,132)$ (75,000)$ -$ -$ -$ -$

EBIT Impact (992,767)$ 908,924$ 999,028$ 1,014,791$ 1,038,079$ 1,070,654$

EBIT Impact (992,767)$ 908,924$ 999,028$ 1,014,791$ 1,038,079$ 1,070,654$

Adjust for Non-Cash Items

Depreciation -$ 22,675$ 22,675$ 22,675$ 22,675$ 22,675$

Amortization -$ -$ -$ -$ -$ -$

Asset Write-off 140,635$ -$ -$ -$ -$ -$

Total Non-Cash Items 140,635$ 22,675$ 22,675$ 22,675$ 22,675$ 22,675$

Income Tax 386,186$ (353,571)$ (388,622)$ (394,754)$ (403,813)$ (416,484)$

Net Cash Flow Impact (465,946)$ 578,027$ 633,081$ 642,712$ 656,941$ 676,844$

Inventory Reduction -$ 103,776$

Capital Investment (226,750)$

Total Cash Flow Impact (692,696)$ 681,804$ 633,081$ 642,712$ 656,941$ 676,844$

5-Year 10-Year

Net Present Value (@ 13%) 1,435,554 2,689,627

NPV of EVA (@ 13%) 1,271,406 2,443,070

Total EVA Impact (Gross) 2,304,386 5,811,240

Internal Rate of Return (%) 42.1% 31.9%

Cash Flow Summary

Scenario 1A-3 : Consolidate Richmond Into Washington

Cash Flow Impact by Year

Financial Summary

Phase 3: Example: Financial Modeling Rollup

Build up financials at the GL level of detail to enable easy accounting audit & flexible sensitivity analysis

Avoid black box cost savings numbers!



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Inventory Value Comparisonby Product Family

F2004 Actual vs. Optimized

Prod Family 01-HandGuns 02-LongGuns 03-Ammunition 04-Optics 05-Reloading 06-Blk Powder 07-Gun Acc

Inv Value ($M) $6.2 $16.3 $5.9 $2.1 $0.6 $1.5 $0.7

% of Total 18% 46% 17% 6% 2% 4% 2%

Future Value $4.1 $6.0 $2.5 $1.2 $0.4 $0.7 $0.4

% Change 34% 63% 57% 46% 37% 49% 47%

On Hand Units 35,315 41,562 550,285 82,104 52,247 54,813 53,686

% of Total 3% 4% 53% 8% 5% 5% 5%

Future Units 12,235 14,902 221,560 28,579 32,640 18,540 29,095

% Change 65% 64% 60% 65% 38% 66% 46%

Turns 7.84 3.40 3.83 5.83 6.31 3.55 6.12

Future Turns 11.87 9.22 8.97 10.73 9.95 7.01 11.46

% Change 34% 63% 57% 46% 37% 49% 47%

Days Supply 88 87 86 73 62 67 53

Future Supply 31 31 35 26 39 23 28

% Change 65% 64% 60% 65% 38% 66% 46%

$6.2

$16.3

$5.9

$2.1$0.6

$1.5$0.7

$7.1

$10.4

$3.0$1.8

$0.4$1.2

$0.5

$4.1

$6.0

$2.5$1.2

$0.4 $0.7 $0.4

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

F2004 - Actual Forced SL Future - 'Premium'

Total: $35.2M Total: $16.4MTotal: $20.5MInventory Value ($M)

Inventory Turns Comparisonby Warehouse

F2004 Actual vs Optimized

Scenario F2004 - Actual Forced SL Optimal SL Future - 'Premium'Inv Value ($) $35,166,812 $25,630,162 $20,498,920 $16,421,476

% of F2004 100% 73% 58% 47%

On Hand Units 1,044,239 535,881 508,603 455,192

% of F2004 100% 51% 49% 44%

Turns 4.59 6.29 7.87 9.82

% of F2004 100% 137% 171% 214%

Days Supply 76 39 37 33

% of F2004 100% 51% 49% 43%

4.86

7.00

8.90

10.12

6.36

5.22

7.03

4.12

0

2

4

6

8

10

12

BE 02Inventory Turns

Phase 3: Inventory Optimization

A key deliverable within a supply chain network study is the understanding of how to optimize the cost of inventory assets versus required service levels and total operating expenses

You can use inventory simulation tools or other modeling techniques to obtain accurate inventory optimization projections



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Phase 3: Carbon Footprint AssessmentCap & Trade Compliance

US Production-

Optimal

US Production-

Opt with Cap (35K)

US Production-

Opt with Cap &

Trade

Production Cost $19,163,011 $19,163,011 $19,163,011

Inbound Shipping Cost (Rail) $4,804,922 $4,995,311 $4,916,713

Outbound Shipping Cost (Truck) $17,458,372 $15,624,919 $17,464,900

Warehouse Fixed Costs $11,750,000 $13,850,000 $11,750,000

Total Supply Chain Cost $53,176,305 $53,633,241 $53,294,624

Net Carbon Penalty ($50/ metric ton) $0 $0 $111,038

Total Cost $53,176,305 $53,633,241 $53,405,662

Total CO2 Emissions (metric tons) 39,737 34,917 37,220

Baseline CO2 Reduce 25%

Companies are increasingly making decisions based on the carbon footprint associated with different supply chain network options

CO2 Reduce 10%

Optimal CostAdding 2 DCs reduced costs 2% and

distance to customer by 46%



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Phase 3 – Real Estate Assessment

Community Characteristics

Civilian Labor Force (2007) 78,912

Blue Collar Labor Force (2007) 22,894

Projected Growth (2012) (%) 3.19%

Unemployment Rate (2007) 4.25%

Projected Growth (2012) (%) 0.36%

Access to Union Pacific Yes

Access to BNSF Yes

Access to Shortline Railroad No

Available Greenfield Sites Yes

Available Brownfield Sites No

Other Railroad Shops in the Area Yes

Supplier Proximity High

Tax Environment / Incentives

Corporate Income Tax Rate 7.81%Effective Sales/Use Tax Rate 5.00%

Incentives

Job Training YesInfrastructure Assistance Available Yes

Low/No Cost Loans Available (Y/N) Yes

Compensation Credits Yes

Investment Tax Credits Yes

Sales Tax Rebate Yes

Grand Island, NE

Highlights:

• Highest ranked location in

screening model

• Site has access to both Union

Pacific and BNSF

Median Wages:

Laborer: $11.80

Driver: $14.43



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Implementation Plan

Develop High-LevelRollout Strategy to Implement Strategic Supply Chain Network Optimization

Identify Key Stakeholders for Implementation Phase GAP Analysis – IT, Process, People Develop Management Consensus on Pilot Site and

Phased Rollout Strategy and Communication Strategy Detailed Location Screening, Site Selection and Real

Estate Support Services Traffic Studies Facility Design Services, Material Handling Systems Supply Chain Technology Systems Transportation Execution Optimization

High-Level Implementation Plan

Strategic Market Assessment

Project Road Map

Develop Detailed Plan for Transition to Optimal Network

Establish Organization Structure and Project Resource Requirements

Identify Detailed Project Schedule for Transition Planning

Develop Prioritization to Capture Quick Wins

Detailed Project Road Map

Pilot ProjectImplementation and Execution

Manage, Assist and/or Participate in Key Activities Identified Within Project Road Map

Execution of Network Optimization Recommendations

Project Approach - Phase 4Transition Planning & Implementation



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Phase 4 - Real Estate - Detailed Location Screening

Locations need to be investigated based on:

Locations of suppliers

Transportation considerations – e.g. Direct access to rail networks and highway networks

RFI Responses from Economic Development Agencies

Workforce demographics



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Phase 4 - Real Estate - e.g., Detailed Location Screening



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Phase 4 – Site Selection

Site Selection Suitability Analysis – GEO Mapping



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Phase 4 – Implementation ServicesTransit Feasibility Assessment – Population Growth Forecasts

Key Takeaways



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Key Takeaways: Success Factors For the Project

Supply chain strategy can only be optimized if there exists a well-defined business strategy that precedes the study

Logistics is a support function and it cannot be optimized unless a business strategy has already been defined as a guiding light.

Otherwise we head directly into the storm with no beacon to guide us.



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Everyone thinks they have great data until they get into a logistics study and find out otherwise...

Data Quality is Critical:

The ability to obtain clean, accurate data drives costs and timeframes for any study.

It is common to make data assumptions.

Establish a level of precision and a time period for data gathering that is appropriate to the study because perfect data will never be available



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Establish a cross-functional team:

Reports into Project Leadership & Committee

To support the project by providing an overall understanding of the business

To make decisions throughout the project

To participate in regular scheduled updates and watershed meetings



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Don’t try to determine all scenarios upfront.

The optimization process will actually invoke new “what-if” scenarios that will challenge pre-conceived strategies.

Management will want to explore “hybrid” scenarios as the results begin to be understood.

Expect the unexpected because the direction will take on new direction as the project unfolds



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Optimization of operating expenses is only one dimension of a supply chain albeit an important one.

It is important to address all shareholder concerns:

Customer service impacts

Minimizing risks - business, political, currency, tax, legal, labor, etc.

Tax implications

Liabilities associated with real estate holdings

Information technology constraints

Fuel cost sensitivity



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Time to Ask Questions...



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For More Information:

Speaker: Marc Wulfraat

Home Page: www.mwpvl.com


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Insight Into Redesigning Your Distribution Network …...Distribution strategy defines how we move...

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