A major and long-established national company based in Lombardy, active in the production of food products for both the domestic and international mass-market supply chain, requested support from aBCD Consulting in designing its new operating and distribution model following the introduction of new production lines and the resulting reduction of logistics space within the plant.
The challenge
The company was facing a situation where increased production capacity converged with reduced storage capacity at the plant, leading to the need to:
Manage a significant increase in logistics volumes of finished products
Manage a substantial portion of stock at an external site
Evaluate the strategic outsourcing of finished-goods logistics, from end-of-line to final delivery of finished products (and possible reverse logistics)
The main objectives of the project were to:
Keep operational costs under maximum control
Identify the right balance of stock and the highest possible synergy between activities carried out at the plant warehouse and those at the external warehouse
Obtain a clear picture of existing flows and constraints, and a reliable projection of costs (Capex / Opex)
The solution
aBCD Consulting conducted a multi-phase analysis:
1. Analysis of warehouse processes and flows
Handling
Handling from “end-of-line,” stock placement, order preparation methods, and shipping for different sales channels and markets (large-scale retail, traditional trade, e-commerce, EU export, US export, etc.)
Mapping
Mapping of routes, equipment, and available storage areas (racking, drive-in, bulk storage areas, etc.)
2. Analysis of the order database, item master data, rotation classes, and stock profile
Analysis of item master data
Analysis of item master data, breakdown between Private Label and own brands, and segmentation by rotation classes
Analysis of the order database
Analysis of the order database, customer and order segmentation, analysis of order composition by customer (Private Label vs own-brand items)
Analysis of the historical and projected stock profile of each item
3. Identification of high value-added activities and necessary low value-added activities
Minimization
Minimization of necessary but low value-added activities (shuttling, double handling, etc.)
Centralization
Centralization of high value-added specialist activities (picking, reverse logistics, e-commerce)
4. Layout analysis and storage opportunities
Assessment of the current arrangement of goods
Identification of storage methods
Identification of storage methods (bulk, racking, etc.) and appropriate equipment (types of racking, types of forklifts, etc.)
5. Evaluation of organizational processes
Review of processes
Review of processes due to the activation of an external warehouse
Definition of handover processes
Definition of handover processes and responsibilities assigned to the outsourcer at the “end-of-line”
Identification of issues and opportunities
Identification of organizational issues and opportunities
Results achieved
Thanks to the intervention of aBCD Consulting, the company was able to:
Reduce by 60% the number of shuttling trips
initially planned to the external warehouse (–€120K/year in transport costs and –€40K/year in double handling)
Reduce by 25% of the external warehouse
originally planned size (–€90K/year)
Keep strategic activities within the plant
such as managing US exports, characterized by large-volume FCL orders with administrative and documentation complexity
Retain the management of major large-scale retail customers at the plant
thanks to an accurate study of the historical purchasing mix between own-brand and Private Label products
Centralize
picking operations at the external warehouse to maximize productivity and specialization
Reduce by 80%
orders requiring a double loading point (plant warehouse + external warehouse)
with the goal of reducing costs and improving service for their customers.
