It is not efficiency or speed which is the primary goal of the Supply Chain, but rather using those mechanisms in a decision context to drive profitability, not as an end to themselves. Speed and efficiency are killing middle tier retail through their haphazard application without regard to brand strength, margin attainment, and markdown avoidance.
17
Page 1 Whole Supply Chain Cost Allocation by Product and Service Channel Supply Chain technologies and standards advanced during the Twentieth Century to such an extent that the average consumer goods merchant across that time span began to develop, as a part of its regular product offering sold to its customer, the actual servicing and delivery of its finished goods and raw materials. Driven by economic forces, executive thought over the last eight years in particular, has moved out of the efficiency based world of logistics and into the realm of service as a competitive advantage. Consumer goods companies in particular have begun to develop strategies around not only using speed to market as a competitive distinction, but began to understand that the timing and quality of service is directly linked to the margin strategy of a given product. Gone are the days of ‘Speed to Market’ or ‘Efficient’ Supply Chains with the end purposes of just being blindly quick or lean, and broaching are the days of effective ‘Speed to Margin’ business thinking. A company which saves 32 cents per unit sold, by consolidating its purchases into one fast and efficient Merchandise Push shipment, which however subsequently marks down 65% of that Push by $3.00 per unit because of sellthrough risk mitigation overbuying, has not executed a sound margin decision. This may sound like common business sense, but surprisingly, this goal misalignment is reflected in 95% of finished goods orders globally today. (3) Single Value Channel strategies may be efficient, but adherence to one channel for all purchases and sourcing is simply not good business. Planning for efficiency, for efficiency’s sake alone, is not efficient at all. The onus on Global Supply Chain management broaching the world industry over the next eight years, will not reside simply in making logistics mechanisms efficient, but moreover, in directly linking Supply Chain performance level and expense decisions with resulting profitability by item. Value Chain Strategy powered by FourthQuadrant Value Chain Management Supply Chains developed on a Value Channel Strategy basis bear completely different features from Supply Chains planned for optimized efficiency. The Return on Investment potential can range from .1 to 3% of Sales
Transcript
Page 1
Whole Supply Chain Cost Allocation by Product and Service Channel
Supply Chain technologies and standards advanced during the Twentieth Century to such an extent that the average consumer goods merchant across that time span began to develop, as a part of its regular product offering sold to its customer, the actual servicing and delivery of its finished goods and raw materials. Driven by economic forces, executive thought over the last eight years in particular, has moved out of the efficiency based world of logistics and into the realm of service as a competitive advantage. Consumer goods companies in particular have begun to develop strategies around not only using speed to market as a competitive distinction, but began to understand that the timing and quality of service is directly linked to the margin strategy of a given product. Gone are the days of ‘Speed to Market’ or ‘Efficient’ Supply Chains with the end purposes of just being blindly quick or lean, and broaching are the days of effective ‘Speed to Margin’ business thinking. A company which saves 32 cents per unit sold, by consolidating its purchases into one fast and efficient Merchandise Push shipment, which
however subsequently marks down 65% of that Push by $3.00 per unit because of sellthrough risk mitigation overbuying, has not executed a sound margin decision. This may sound like common business sense, but surprisingly, this goal misalignment is reflected in 95% of finished goods orders globally today. (3) Single Value Channel strategies may be efficient, but adherence to one channel for all purchases and sourcing is simply not good business. Planning for efficiency, for efficiency’s sake alone, is not efficient at all. The onus on Global Supply Chain management broaching the world industry over the next eight years, will not reside simply in making logistics mechanisms efficient, but moreover, in directly linking Supply Chain performance level and expense decisions with resulting profitability by item.
Value Chain Strategy powered by FourthQuadrant
Value Chain Management
Supply Chains developed on a Value Channel Strategy basis bear completely different features from Supply Chains planned for optimized efficiency.
The Return on Investment
potential can range from
.1 to 3% of Sales
Page 2
Idhasoft, Ltd. along with its United States subsidiary Idhasoft, Inc. has been instrumental in the development of Supply Chain Strategies for over 150 consumer goods and manufacturing companies worldwide. During this 22 years reign as a Best of Breed provider of these services, it has become clear to senior executive support resources that the landscape facing many global operators has changed dramatically. In the 1990’s many of the world’s best operators gained tremendous global momentum through the establishment of efficient commodity delivery mechanisms. Consolidation complexes in Shenzhen and Long Beach, robust and functional megaplexes, are a legacy of this efficient consumption oriented planning philosophy. (1) Throughout the establishment of these strategic handling ports, global companies gained advantage by driving down the cost of product sourcing and delivery. Understandably, companies which offered commodity or staple consumer goods, were the winners in this dramatic shift in global Supply Chain. Their competitive cost structures simply drove smaller competitors out of business through aggressive price competitiveness. In 1961, before the container was employed worldwide as a standard, ocean freight costs accounted for as much as 10 percent of the value of U.S. imports. For some commodities, freight comprised as much as 25 percent of the cost of the product, according to a Society of Naval Architects study concluded after review of the data from 1959. (2) Today, the average consumer goods burden in freight expense, as a percentage of retail, is in the range of 1.2 to 3.5 percent to sales. (3) From an operations perspective, this landmark reduction in cost was part of the impetus which drove the massive commercialization success of the North American consumer goods market during the 1970’s, 80’s and 90’s. However, with the inevitable advent of oligopolistic plays such as Wal-Mart, Proctor & Gamble, and Kroger which result from the powerful weaponry such efficiencies afford, along come a horde of business disadvantages. Many of these disadvantages do not manifest themselves until the consumer goods margin equation begins to place a valuation on the service level which is employed to effect delivery of a component or finished good, or begin to see costs as a chain of connected and margin sensitive activities rather than simply a bucket of associated expenses. Just because dollars are spent on moving a container, does not mean that all those dollars need be accounted for under a line item called “container moving.” This makes no sense from a business perspective and does not help decision-makers rationalize their business effectiveness. This vertical misappropriation of expense accounting lies at the core of the consumer goods global supply chain challenge worldwide today. So while we have seen a leveraged drop in the cost of bringing freight into the US, on the whole a tremendous achievement; at the same time, we have undergone a tremendous increase in the push merchandising and markdown philosophies under which those efficiently serviced goods are sold. The size of the average buy has increased as merchants ever increasingly rely upon mass purchase leverages to achieve Gross Margin Return on Investment goals through efficiency and price point. Commensurate with this first blush advantage in efficient cost sourcing, the United States realized an increase in the average
As a result of planning for efficiency
only, consumer products companies are
Overbuying/mis-timing
inventory and then having to mark that same inventory down to sell it, and
Under-allocating/Over-
allocating costs to categories; not knowing that the company is losing or making profitability on those items.
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markdown rates realized in retail. Today the National Retail Federation and other industry sources cite that a full 65% of consumer goods are marked down or discounted below their Gross Margin Plan in some fashion. (3)(4)(5)(6) In addition, because these costs have leveraged so low historically, operations costs were at one time added as an accounting footnote in the profitability lines of the typical Profit and Loss statement. (1) As fuel prices and costs of labor and facilities have risen however, and pricing pressure from a continuously discriminating buyer-base increases, this cost component as a percentage of retail has begun to creep back up, forcing consumer goods companies to re-examine their approach to achieving business margin goals. Today we are faced with the echo of the efficiency boom so effectively brought about in global logistics over the last 15 years. But there are problems, and those problems are specifically that consumer products companies are
a. Overbuying/mis-timing inventory in order to attain efficiencies of logistics, and then having to mark that inventory down to sell it, and
b. under-allocating those costs to high cube and complex items, and over-allocating those same costs to basics thereby misleading many companies as to true profitability performance.
THE MALADY
There is an inherent set of legacy practices that drives this misalignment of margin and departmental goals inside of consumer products. This misalignment has become apparent in the over 150 Supply Chain and Value Chain Strategies conducted by Idhasoft over the last 22 years. Its essence resides in the disciplines and practices begun in profit and loss accounting in the seventeenth century and applied rigorously within consumer goods production sourcing and demand accounting even into today’s largest Enterprise Resource Planning suites. There are three components to this misalignment of merchandise profit and operational goals:
Vertical Profit and Loss Expense Silo’s - Expenses, and especially direct operating expenses are tracked in ‘like activity’ silo’s rather than by channel of service and the commensurate returned margin that service channel drives for a specific product. This is actually the root cause of this lack of understanding along with an inventory focus on GMROI (5)(6), rather than what is termed a VALUE CHANNEL RETURN ON INVESTMENT.
Misaligned Organizational Structures and Measures – Consumer products company executives are incentivized to maximize unit sellthrough, lower Cost Purchases beyond the market value of the item, sacrificing its quality, and lower business expenses. (7) The key is that lower expenses by management domain, increased unit sales, and lower cost purchases are not always aligned with the overall health and profitability of the business. (8)
A company which saves 32 cents per unit, through logistics efficiency, but then subsequently marks down 65% of those same units because of overbuying/mis-timing to market, has not executed a sound margin decision.
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An Outdated Method of GMROI (Gross Margin Return On Investment) determination – The classic definition of GMROI inside in particular the demand end of the consumer products cycle, is to take the margin dollars derived for a product in a given period and divide it by the total average inventory dollars held over that same period, of that same product. This basis of the three primary ERP Margin planning modules. (3)(5)(6) This misleads organizations into a whole host of end state margin reducing activities.
These three principles all serve to misalign corporate goals with effective Net and Gross Margin planning. The core weakness on which these are centered is the consideration of Operating Expense as a cost of business and not a Cost of Goods Sold. (6) Of course we can always treat ‘First Cost’ and ‘Cost Purchase’ as the literal expense paid to manufacture or vendor source an item, this will always be the case. However, a severe lack of focus on the expense impact and role of service in the effective ‘sell’ contributes to this misalignment. Counter to the trend we cited earlier in this article, wherein efficiencies have relegated operating logistics costs to become a footnote in Profit and Loss margins, operating expenses in a high service based – high tech perishability – long global Supply Chain – high fuel sensitive environments have begun to rise to compose anywhere from 5% to 45% as much as the cost of the Cost of Goods Sold themselves. (6) Our failure as an industry to realize that we are ‘selling’ the channel of service and Supply Chain by which we deliver the product perception to the end customer, is at fault for our misalignment of goals. THE VALUE CHAIN
First, Demand is an uncertain thing. The underlying principle in consumer products demand planning is that Forecasts are always wrong. (7) We were to reside in the theoretical world of efficient production planning and MRP constraints analysis then our task as executive and Supply Chain managers would be simple. We could continue to presume that demand is an objective function, or fixed entity even worse, and plan efficiency and optimization to rule the day. Indeed 95% or more of the Supply Chain networks in North America are aligned to optimize expense, without an objective regard to the dynamic of Service Channels constrained into the optimization equation. (3) This is a mistake. It bifurcates the industry into two types of consumer products provider:
1) The Efficient - Those which succeed by offering a broad
array of merchandise, through one efficient optimized Supply
Channel, and
2) The Responsive - Those which offer only a few high margin
categories, through a set of „non-efficient‟ Supply Channels.
Given that demand is not a
certain entity, profitability
therefore, is driven less off of
efficiencies of Supply Chain
infrastructure, than it is driven
by having the ability to place
the right item, at the right
location, at the right time
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The simple fact is, that the average consumer products company needs both ‘efficient’ and ‘non-efficient’ mechanisms at its avail; or better yet expressed, ‘Cost Leveraged’ and ‘Service Profiled’ Channels of Supply Chain in order to appropriately address the broad service levels required to serve today’s customer. These service channels are a key component which influences perceptions on the part of the consumer as to their brand receptiveness and willingness to pay a given margin. Customers are buying the service and touch branding, afforded the delivery of the product into their hands, almost every bit as much as the label branding. The cost of this service, we contend should be allocated, by the type of service needed, into the Cost of Goods Sold profitability model of every product manufactured or sold by a consumer goods entity. Given that demand is not a certain entity, profitability therefore, is driven less off of efficiencies of Supply Chain infrastructure, than it is driven by having the ability to place the right item, at the right location, at the right time, and only that item, despite whether or not the logistics of doing so are ‘efficient.’ Then to complete the measure of profitability, those specific supply channel costs to attain this situation, should be allocated back into the Gross Margin Return on Investment Plan for that item and not be handled as a corporate cost into Net Margin planning. In addition, alternative costs in alternative value channels of service, for that same item should be known and become an option available to the category manager. This cost allocation into Cost of Goods Sold, of the Supply Channel expense involved in servicing one product through one channel of service is called a Value Channel and is the basis of sound business profit decision-making. Its focus is on what is intuitively grasped by savvy consumer products executives, and could be called a NMROI (Net Margin Return on Investment – although there would be more indirect costs entailed in a true NMROI perspective, this is helpful to elicit the principle) or a revision to the classic understanding of GMROI. Executives use this principle subjectively in the consumer goods world today, however are not equipped with the right tools, disciplines, accounting, organizational goals, and information from which to effectively apply a Value Chain Strategy approach to profitability.
Value Channel Business Thinking and Extreme Impact on Profitability
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Gross MarginReturn-on-Investment
Merchant
Selected
Channel
4
1
5
2
Backstock
Inventory
Hold Philosophy
Y-A
xis
1 2 3 4 5 6 7 8 9
Channel Costs
Components of theValue Chain
Co
st
Pe
r U
nit
Unique Channels
(Avg. Cost
Used)
.54
.12
.14
.16
Acquisition
Costs/
Freight
Cost
Purchases
Operations
Costs
Sales
General &
Admin
Pretax
Profit
Margin
.04}
GMROI planning today, as stated earlier, is calculated by dividing item Gross Margin by the dollars of inventory held on average of that item during the time in which that Gross Margin was returned in sales. Today this continues as the basis of many consumer goods plans, in that this GMROI fallacy misaligns corporate goals through outdated P&L structures, offset management goals and incentives, and poor decisions on how to apply Supply Chain efficiency versus responsiveness. We contend that the correct employment of GMROI, in a value context, would be as follows:
In other words, all costs related to the production, sourcing, logistics, and delivery into a kept customer’s hands, should be accounted into a Chain of Value, which returns a specific Gross Margin, for a specific Supply Channel, resulting from a specific Value decision on the part of merchandise planner. The summary depicted below is what is called a Value Chain. It is the essence of expense which is required to produce a given purchase, non-returned, margin outcome for a specific consumption of a consumer good. This margin equation is applied to units sold, and has less to do with the money invested in the inventory which is held during that sales duration, which is the basis of GMROI planning in the industry today. (5)(6) Now certainly measures on the opportunity cost of the inventory investment can be added into this margin equation, however these cost allocations are not expenses in the disciplined sense and can prove to be more problematic than first blush might suggest. We develop programs for Supply Chain strategies which begin on the sound premise of a Value Chain and then move into the inventory argument as an important secondary and conditional consideration, not the primary driver of business acumen. The basis with which Idhasoft has executed Supply Chain Strategy planning for its consumer goods demand and sourcing clients, is centered on a Value Channel approach.
Supply Chains which are developed on a Value Channel Strategy basis bear
completely different features than Supply Chains planned for optimized efficiency.
This effort is what we appropriately title a
VALUE CHAIN STRATEGY POWERED BY FOURTHQUADRANT
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VALUE CHANNEL STRATEGY OVERVIEW
We have seen that the Value Chain is a series of activities through which consumer products pass in order to gain returned margin value. It is important not to mix the concept of the Value Chain with the modal costs occurring throughout the activities. Let’s examine the differences with regards to a diamond cutter, for example. The cutting activity may have a low cost, but the activity adds much to the value of the end product, since a rough diamond is significantly less valuable than a cut diamond. The principal Value Chain elements in the consumer products supply chain include: vendor selection, consolidation / deconsolidation, inbound logistics, distribution operations, outbound logistics, and the retail store or end consumer. An organization’s “local” Value Chains are part of a larger system that includes the linear activity sets of upstream manufacturers and downstream customers. This larger collection of activities is known as the value system. The Value Chain framework is at the forefront of management vision as a powerful analytical tool for strategic planning. The vital goal of Value Chain management is to maximize value creation while minimizing costs. For consumer products clients, value creation often represents maximizing product profitability or gaining additional market share. Capturing the value generated along the Value Chain is IDHASOFT’s approach to supply chain management. For example, a consumer products retailer may choose to implement a two tier distribution network to reduce the total inventory requirement without sacrificing store service. By rationalizing and identifying the upstream and downstream cost impacts along the Value Chain, organizations may choose to develop new channels, establish new brick and mortar entities, and implement other supply chain enhancements to leverage the value system as a competitive advantage.
Value Chain Strategy powered by FourthQuadrant
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KEY OBJECTIVES
Simply put, Value Chain management is the process of making decisions about the routing and storage of goods, based on the actual cost to service a specific SKU (or merchandise category) through a specific pathway from vendor to customer. These specific pathways, defined as unique configurations of the Value Chain elements, are commonly referred to as channels. The key objective of a comprehensive Value Chain strategy is to rationalize and identity the true impact of channel selection on product profitability, gross margin, and market share. An effective Value Chain strategy will enable a firm to make critical decisions, leverage existing resources, and allocate capital in support of the core profitability and market share goals of the organization. Failing to view the organization from a Value Chain perspective often results in segmented and locally optimized functions, in contrast to inclusive strategic execution. IDHASOFT utilizes its proprietary software, FourthQuadrant, to assist clients with Value Chain management.
Technology Investment Areas - Concepts & Technologies
Planning
Tracking
Customer Setup and
Value Chain Design
Value Chain
Simulation
Strategy Plan
Road Map
Generation
Strategy Plan
Tracking
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APPLICATION OVERVIEW
FourthQuadrant is a proprietary decision support system (DSS) that allows IDHASOFT’s clients to lens their value systems and supply chains in horizontal service structures rather than vertical cost silos. FourthQuadrant empowers our clients with the ability to accurately assess the true cost of service at the most appropriate level of detail (merchandise category, SKU, etc.). In addition to rationalizing true and accurate Value Chain costs, FourthQuadrant features industry leading simulation, planning, tracking, and reporting capabilities.
FourthQuadrant is a Web 2.0 solution built using a Windows .NET 3.5 framework (C# / LINQ/
WPF/ WCF/ WWF). The core database language is MSSQL / Server 2008. The business logic tier typically resides on a Windows Vista Business 64 bit multi-core server.
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APPROACH
The first step in value channel management is to conduct a comprehensive data collection effort that enables our modeling experts to configure and populate FourthQuadrant. Included in the data collection effort are informational interviews with key associates / stakeholders, distribution center surveys, and detailed operations and IS data queries. Once the data collection is complete and the business requirements have been approved by the steering committee. the project team will identify and define each merchandise category and work content category for the value channel matrix. IDHASOFT engineers will measure and populate the FourthQuadrant matrix with work content data for each task within the distribution operation.
Specific costs are assigned based on the most appropriate measure (work content or cube-based) for each work function and storage method within the four walls. In addition, a cost equation is developed for each current and potential value channel based on variable and fixed costs to return an exact cost per unit. Variable costs are largely comprised of direct and indirect hourly labor expenses while fixed costs include salaried labor, facility overhead, and depreciation.
Category Identification Information (Dept Classes)Operations Processing
Category
Cost Per Unit
VARIABLE
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CAPABILITIES
The capabilities of FourthQuadrant extend beyond weighted average cost per unit evaluations at the merchandise category level to ground up, discrete value channel costs at the SKU level of detail. Work content for every function, including inventory storage, throughout the DC is identified and evaluated. As a result of the flexibility and scalability of FourthQuadrant, all valid value channels may be assessed for each sales channel, physical flow channel, SKU, inventory type, and purchase order cycle within the supply chain. Rationalized and accurate service costs from FourthQuadrant are utlilized by finance, merchant groups, and operations teams across IDHASOFT’s client base.
Finance – aggregate business performance, procurement decision support, performance benchmarking
Merchants – GMROI planning on true profit, value channel selection, merchandise strategy
FourthQuadrant also enables IDHASOFT to continuously benchmark all elements of the Value Chain against industry averages, potential alternatives, and historical results.
VALUE PROPOSITION
The business impact of Value Chain rationalization with FourthQuadrant as opposed to productivity improvement, netowork optimization analysis, or even a cube-based or simple weighted average mode cost allocation initiative is significant. In our most recent applications of Value Channel Strategic approaches to consumer goods companies, the savings in terms of logistics costs, service effectiveness, reduction in shrink and stockout, timing of goods to margin, and rationalization of performing categories has ranged from .1% to 3% of total retail sales. This is huge in comparison to industry standard efficiency and netowrk optimization studies.
THE IMPACT OF VALUE OVER EFFICIENCY
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COST ALLOCATION EXAMPLE
Let’s examine a simple drain component example for a large home improvement supplier. Because drains are a low volume and small cube item, a basic weighted average cost evaluation traditionally produced a low cost per unit metric. However, drain complexity is actually a array intensive, narrow and shallow allocation profiled and high handling cost merchandise category that may also require above average value added service to move into a saleable condition. Prior the implementation of FourthQuadrant, the expense to margin value impact of drain fixtures was greatly underestimated for both profitability planning and operational budgeting. A sound Value Chain analysis may both show, that a higher cost fulfillment mechanism will recover more sold Gross Margin, as well as show categories where we are actually losing money, and we did not know it.
In addition to end-to-end value channel rationalization, FourthQuadrant is often leveraged as a cost allocation or activity-based costing tool. Rather than making high-level assumptions, using weighted averages, or assigning distribution costs based solely on cube; FourthQuadrant empowers IDHASOFT’s clients to assign specific costs to each item or merchandise department based on the exact channel it traveled through the distribution center. Please see the example below for the basic structure of the cost allocation utility. SKU: 553243 Description: American Standard Lifetime Drain, White Merch_Cat: Plumbing Weight: 5.2 lbs. Cube: 560 cubic inches MSRP: $69.99 Value Channel 1: Flow, Pallet Distro Service Time: 1.8 days DC Cost per Unit: $.18
Value Channel 2: Merch Hold, Case Distro Service Time: 5.6 days DC Cost per Unit: $.38
Case Example: “Hidden” cost impact on profitability
At IDHASOFT, FourthQuadrant enables our Value Chain experts to uncover “hidden” supply chain costs at the item or merchandise category level in route to developing optimal Value Chain strategies and channel selection guidelines for our clients. Rather than using blanket costs, which mix together the disparate costs of handling and servicing goods, Value Chain management measures the true cost for a specific item. These costs and the myriad of alternative routes which that item may take across the Value Chain and through the distribution center are displayed to users in an industry leading interface. Below is a basic example of a FourthQuadrant profitability report for jeans, dresses, and accessories from our benchmark database.
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CASE HISTORY BUSINESS IMPACTS
The most expensive business activities are the cost of lost sale or an unnecessary price markdown. The average consumer product company gross margin ranges from 14 – 42% of sales. Comparatively, supply chain costs range from 2 – 12% of sales in magnitude. Therefore, electing to route goods through expedited or high touch logistics channels is not an unsound business practice, provided that the business can accurately identify the cost impacts and protect gross margin. IDHASOFT has experienced continued success utilizing FourthQuadrant for Value Chain management and supply chain evaluation for our clients over the past 7 years. Specific achievements include, but are not limited to, the following.
$2.2B Sporting Goods, Retail and Customer Direct
Client established distribution center labor cost at $.55 per unit for the next season and had begun staffing accordingly. Sales plans indicated an increase in compliant apparel from 28% to 36% of total business unit volume. Our Value Chain effort showed that $.45 per unit was a more accurate labor cost because of the lower work content involved in a flow apparel push channel as compared to a hard lines pull channel, upon which they had originally budgeted. The new budget resulted in a reduction of $1.2M in early season overstaffing costs.
$3.1B Fashion Apparel, Retail and Customer Direct An initial eight week long examination of the Value Chain resulted in a 50% reduction of safety stock held for 30% percent of the fashion items. Additional savings were realized in a 180-day period by enabling merchants to select
the appropriate network channel based on the FourthQuadrant analysis of true handling costs and service
requirements.
$4.5B Value-priced Apparel, Retail
Client budgeted $.245 per unit for future operations, but merchandising planned to shift its mix of home products from
9% to 38% percent of the total unit volume. A FourthQuadrant analysis indicated that the average home product
processed at a true burden of $.76 per unit and required triple the distribution space (sq. ft.). Although the new home lines were profitable, without understanding the true cost to serve, the retailer would have grossly under budgeted and critically mis-planned the requirements to handle the new product mix.
$750MM Fashion Apparel, Retail
Client’s distribution infrastructure was out of capacity and they sought to develop a strategy to accommodate the
space and throughput shortfalls. IDHASOFT used FourthQuadrant to identify which merchandise categories were
most appropriately handled by a third party partner based on quality concerns, ship accuracy, and profitability. The results of the Value Chain analysis allowed the client to meet store service requirements during peak season while avoiding $1.1MM in additional distribution expense.
$2.1B Specialty Apparel, Retail and Customer Direct
Determined the optimal use of vendor created inner packs, vendor created case packs, and consolidator created case packs by merchandise category for client. The cost savings opportunity alone was in excess of $1.2MM annually.
Distribution Network Strategy and Distribution Center Design
IDHASOFT utilizes FourthQuadrant in all distribution network strategy and distribution center design efforts to
ensure that all solutions meet the needs of the corporate goals, mitigate risk, protect gross margin, and promote profitability with the principal understanding that the least costly solution is not necessarily the optimal answer for the business.
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About IDHASOFT
IDHASOFT partners with its clients to deliver end-to-end supply chain solutions through the development of competitive and resilient supply chain strategies and processes. Our depth and breadth of experienced people and industry partnerships allow for our customers to rely on us to help them meet or exceed their goals and business objectives.
IDHASOFT helps distributors, manufacturers and retailers improve through-put, reduce operating costs and achieve perfect order fulfillment from supplier to customer. We have helped over 250+ companies realize operational improvement and financial gains by aligning strategy, streamlining processes and implementing software systems.
IDHASOFT's customers' operate some of the leanest and most sophisticated supply chains in their industry supported by integrated demand planning, warehouse management, transportation management, labor, voice, material handling and business intelligence systems. Our customer's models range from single distribution center (DC), single channel, make to stock configurations to multi-DC, multi-channel, make to order and engineer to order configurations.
IDHASOFT adds value by applying practical operating and systems expertise to ensure measurable, sustainable and cost justified change. We collaborate with solution providers that are best suited for our customer's unique industry, challenges and budget. Our portfolio of qualified solutions is designed to meet the needs of an entire enterprise or a specific supply chain component. Whether the issues are information technology or operations based, un-known or un-realized, IDHASOFT provides the knowledge to help achieve supply chain excellence.
To learn more about realizing benefits from Idhasoft, contact us: Contact: Roger B Cunningham Address:
IDHASOFT, INC. 3730 Roswell Road – Suite 275 Marietta, Georgia 30062
