How to use location to cut costs in your supply chain networkFebruary 8th, 2017
How well do you know your network and the associated costs? If your supply chain distribution network is in the process of expanding or downsizing because of the introduction of new stock, shifting customer demand, the expiry of existing contracts, competitive pressure or a merger or acquisition, reconsidering the locations of your distribution centres and facilities will be key to adapting effectively.
Location informs everything we do, and should be an essential part of your supply chain strategy. If you’re a supply chain or distribution specialist right now, you might be looking to strike a fine balance between property location costs and transportation costs or may have a greater interest in finding the most well connected sites for deliveries and outbound.
Additionally, reducing drive times between source and demand points can translate into huge cost savings and a more resilient supply chain, resulting in better margins and a superior customer experience. Wherever you’re based, the below steps can help you quickly make sweeping savings in your supply chain distribution network.
Consider setting up additional locations to share the operations of your existing sites
For companies looking to expand, it is sometimes more cost effective to set up entirely new distribution facilities in order to effectively service customer channels and avoid spreading resources and manpower at existing locations too thin. While new warehouse locations represent significant initial investments, in the long term this can prove to be a cost effective strategic decision with the right location. This is particularly true if your new location is in a better position to service other existing source or demand points. This alone can sometimes justify a new location and can enable big savings on logistics costs.
Consider whether or not certain distribution facilities can be decommissioned
Undertaking close supply chain network analysis and making careful adjustments to the allocation of resources by incrementally expanding operations in alternative nearby locations or setting up smaller distribution facilities can allow you to eliminate commercial locations with minimal impact to customer channels. This approach is ideal for companies that are looking to downsize their operations or are facing acquisition or corporate merging, and can yield vast savings without compromising customer experience.
Consider the road network accessibility of your depots or warehouses
The question of road network accessibility primarily impacts your fleet, affecting both the volume and the time it takes to transport materials to and from your locations.
Are your locations easily accessible from the surrounding main road or highways? Also, putting a distribution facility more directly between the relevant source and demand points can yield huge savings by cutting fuel and fleet costs and improving the consistency of the operation.
Revise asset utilisation and undertake route optimisation for your fleet
How hard are you sweating assets such as your fleet? Routing is the process of mapping out routes for one or more vehicles to take while they deliver or collect stock from each of their stop points. Scheduling is the process of calculating and assigning an arrival time for each stop, with drivers being assigned shifts that adhere to working hours.
Route optimisation follows these steps and is the process of analysing the projected routes and refining them to be more efficient for superior asset utilisation, taking a range of factors into account such as vehicle type, type of stock, road restrictions etc. Optimisation enables your vehicles to service more stops with fewer vehicles, and often more quickly and reliably.
Optisite is a site location modelling tool that can identify the optimum number and best locations for the distribution centres of your network; find potential new sites, or to design a brand new ‘right-size’ network.
Truckstops handles multi-drop and multi-depot tasks incorporating time windows, driver’s hours, vehicle costs, vehicles constraints and many other variables to reduce costs, save time and improve customer service.