Client Overview
The client is a distributor of IT hardware and equipment with warehousing operations in Birmingham supplying customers in the UK, Europe, Middle East and beyond.
Project Objectives
The cost to serve of its European customer base had risen sharply with the impacts of Brexit adding customs clearance charges and more variable lead-times. The business was keen to evaluate options to reconfigure its logistics network with the establishment of a new distribution facility located within the EU to support its continental customer base’s growing volumes.
- Evaluate whether there was a more cost-efficient solution in setting up a European DC
- Identify the tipping point when a change in network becomes viable.
Project Approach
- Analysed the network flows of inbound and outbound shipments, cost drivers and the impact of projected growth on the logistics network.
- Performed centre of gravity analysis to understand the potential distribution locations for a single, two and three DC network.
- Evaluated the impact on running costs of each of the potential network configurations using benchmark cost driver data for new warehousing and shipping locations.
- Identified the preferred network configuration, validating the key cost drivers with relevant market data to compare against modelled output.
- Developed a business case to assess the overall benefits of a making a transition to a new distribution network.
Project Results
- Provided a clear recommendation to maintain European distribution from the UK until operational capacity in its UK sites had been exceeded.
- Identification of the optimal network configuration for its European distribution which was a single DC around Paris or Northern France with easy access to pallet carriers.
- Used sensitivity analysis to test the impact of various growth scenarios against the preferred option to demonstrate the robustness of the solution.
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