What Is The Most Cost Effective Way To Serve Your Customers?
When your supply chain grows so do its inefficiencies. Warehouses need to be added or consolidated, individual DC capacity may need to be expanded, and a whole host of options need to be considered. At Pareto, we have years of experience bringing costs down and improving service levels through supply chain optimization and inventory optimization.
What is the impact on inventory investment as I increase facilities?
Network optimization can quantify how much more you will have to spend on inventory for each Distribution Center (DC) you add to the network. It balances this cost against all of the other costs in your supply chain to find the optimal configuration of your network.
If I could start from scratch, where would I put my facilities?
As part of each network optimization project we perform a “center of gravity” analysis to calculate the center of your network for 1 DC, 2 DCs, 3 DCs,….. N DCs. This exercise can often provide great insight as well as a solid starting point for sites to consider in a full network optimization.
What Will the New Design do to Service Levels?
At the heart of almost every business relationship are expectations . . . expectations that have to be set, managed and met or exceeded.
When it comes to your business, the service level’s to your customers is a one of the most important things to quantify when
changing the network. We often build detailed simulations of proposed optimal networks at the transaction level to accurately estimate new service levels.
How close are you to your customers?
It’s important to be as close and responsive to your customer base as possible.
A network optimization project with us can help quantify how close your customers currently are to your facilities,
but also how close they will be with future configurations.
The list of questions goes on and on . . .
The sections above highlighted some common questions. There are so many more that can be answered. Some additional questions include:
- How can we reduce the overall supply chain costs?
- How many warehouses should we have, where should they be, how large should they be?
- What products will they distribute and how will we serve our different types of customers?
- What products should we make internally and which should we source from outside vendors?
- If we source from outside suppliers, which suppliers should we use?
- What is the trade-of between the number of facilities and overall costs?
- What is the trade-off between the number of facilities and the service level? How much does it cost to improve the service level?
- What is the impact of changes in demand, labor cost, and commodity pricing on the network?
- When should we make product to best manage and plan for seasonality in the business?
- How do we ensure the proper capacity and flexibility within the network? To meet demand growth, do we need to expand our existing plants or build new plants. When do we need to add this capacity?