Challenge
Our client’s complex, multi-tier distribution system services thousands of stores in the United States and is utilized for thousands of Stock Keeping Units (SKUs) that are shipped from hundreds of vendors through a major network of distribution centers.
The products distributed to our client’s stores range from short shelf life items such as produce to items which have seasonal and unpredictable demand, like toys. Sales volumes, supplier lead times and inventory requirements for these products also vary significantly. Above all, our client must maintain consistently high service levels and food quality standards.
The challenge was to design the optimal distribution network that could improve upon the freshness of products (food items), handle expected demands from current and future stores, reduce total distribution system costs, and support and enable their long term acquisition strategy.
Solution
Our client chose SCA Planner, SCA Technologies’ predictive, cost-modeling software suite, because it is the one of the only software suites in the industry that can strategically manage their complex distribution system, given the overwhelming number of options The tool provides an holistic view of the supply chain, and enables optimization of the entire system. It integrates decisions such as: capacity levels at each distribution center, distribution process choices, exclusivity levels, store assignments, and setting delivery frequencies. Broadly, the solution provides the following:
- Optimize the number, location and capacity of the plants for total supply chain performance
- Incorporate contingency needs in the supply chain
- Enable product diversity by the selective use of new manufacturing technologies
Results
SCA Planner™ helped our client to restructure its distribution system and drive a 6% – 8% savings in various markets. In addition, it has enabled our client to improve
product freshness and reduce cycle times for timesensitive items. The process model also helped the company to arrive at the right long-term design for their supply chain while considering their long-term acquisition strategy.