PDC, now a part of KPI Solutions, was contracted by a food producer and distributor in the Southeast that wanted to evaluate its long-term distribution network strategy, placing particular emphasis on determining the merits of consolidating distribution inventory to two co-located facilities versus four distribution locations currently utilized.
The company partnered with KPI Solutions to examine the supply chain effects and ROI cash flow effects associated with utilizing two locations to serve its entire territory. KPI Solutions approached the problem using a layered set of analyses using advanced network design optimization technology and detailed distribution center design. The overall objective was to determine supply chain cost savings and estimation of one-time capital costs and define the cash position and ROI on various options. The results of the network analysis proved very dependent on the length of the work days aligned with customer delivery windows. Through this effort KPI validated that a consolidation strategy was feasible without negatively affecting service levels.
- The network analysis resulted in an annual delivery network cost savings of $7.4 million
- Potential of $1.1MM additional savings based on extending delivery workdays
Advanced network modeling technology was utilized to define the impact of distribution consolidation
Recommended consolidation from 4 to 2 distribution points
$7.4MM annual network cost savings with the potential for an additional $1.1MM savings