For a $1.5Bn US E-commerce gift retailer facing seasonal challenges, we optimized their distribution network, resulting in a 15% reduction in logistics costs and a 23% improvement in service levels.
Approach
- Created an As-Is flows and cost profile for the business unit using 1 year of shipment data.
- Created baseline models using OPTIMA (a network optimization software).
- The baselines were created within 2% variance.
- Three scenarios were tested to understand impact on costs and service levels.
- - Optimizing inter facility and customer
- assignments
- - Optimizing inventory positions
- - Optimizing distribution center locations
Results
- Assessed results from each scenario to inform future network strategy.
- Inventory optimization was the most significant lever in reducing costs.
- 15% Identified 15% reduction in logistics cost and 23% improvement in service levels.
- Identified capacity changes required at existing DC locations to execute optimal inventory strategy.
- Identified DC-Parcel hub mappings and Parcel hub-customer mappings for optimal flows.
Segment: CPG / Food & Beverage · Services: network-distribution