An important company in the food and beverage sector turned to aBCD Consulting to address several needs, including optimizing its national distribution network for the Ho.Re.Ca channel to improve operational efficiency, reduce costs, and increase delivery punctuality.
The challenge
The challenge stemmed from the complexity of the existing network, unchanged for years, rising logistics costs, and the need to assess the economic sustainability of each regional distribution hub.
Dispersed logistics flows:
heterogeneous destinations, with high geographical concentration in key areas.
Performance below standards:
significant delays in deliveries, with punctuality lower than the set targets.
High costs:
expensive management of distributed stock and transportation.
Fragmented network:
structural inefficiencies resulting from the division into multiple distribution centers.
The solution
aBCD Consulting developed a three-phase project:
1. Diagnosis and assessment of the AS IS network design:
Geographical flow analysis:
Absorption of distributed volumes across the national territory, considering:
- Presence/proximity of a regional distribution hub.
- Coverage of high-consumption areas (population density).
- Direct sales network coverage.
Absorption of locally distributed volumes in the “competence” area of each regional distribution hub:
- Distance from the regional distribution hub.
- Commercial penetration per municipality (HL sold per inhabitant).
Analysis of inventory levels across the territory:
Analysis of stock levels at the central hub.
Analysis of stock levels at individual regional hubs
(cross-referencing ABC matrices and weeks of coverage per item).
General considerations and identification of key issues, areas for investigation, and areas for improvement.
2. Dimensional and economical analysis:
Characterization of the cost structure and operational capacity of each regional hub:
Fixed costs
(rent, personnel, equipment, etc.).
Variable costs
(shuttling, distribution, etc.).
Capacity
(nominal warehouse capacity versus actual demand).
Valuation of the cost model:
Based on the last 12 months' volumes.
For alternative scenarios:
- Geographical repositioning of the regional hub.
- Resizing the stock capacity of the regional hub.
- Transforming the regional hub into a Cross-Docking platform.
- Eliminating the regional hub, ensuring service from the nearest regional hub or central hub.
Valuation of impacts from potential repositioning of the central hub and consequent reallocation of geographic areas in all simulated local scenarios.
3. Creation of an operational and economic simulation model:
Creation of a simulation model linked to the sales volume database from the past 12 months, which, by selecting some simple setup parameters (province and expected sales volumes), estimates:
Approximate distribution costs for the province in the three possible configurations:
- Direct from Central Hub.
- With a Cross-Docking platform in the selected province.
- With a regional hub in the selected province.
Break-even point for each of the three solutions.
Results
Thanks to aBCD Consulting’s intervention, the company received precise guidance:
For the correct capacity and sizing
of the different Regional Hubs.
For deciding to eliminate or resize certain Regional Hubs
to Cross-Docking platforms.
For deciding to geographically reposition
certain Regional Hubs.
For evaluating the opening of new Regional Hubs,
identifying the target sales volume to be achieved.
The overall intervention enabled the complete redesign of the logistical framework and the planning of strategic actions in a multi-year implementation plan, leading to a redistribution of costs towards higher value-added activities and investments, ensuring significantly better overall performance and an organization capable of robustly supporting projected growth.
The distribution network consulting offered by aBCD Consulting
is designed to strengthen and optimize the distribution network. Thanks to our expertise and professionalism, we can transform a company's distribution network into a solid competitive advantage.
