One of the toughest challenges businesses face today is mounting customer expectations – an ever-growing demand for better, faster service and lower prices. The challenge is compounded when businesses make acquisitions, enter new markets, launch new products, or fulfill through new channels. As a result, many organizations find their distribution networks are often misaligned with the company’s business strategies. Customer satisfaction, market share, revenue growth, cash flow and operating margins may suffer.
It’s a difficult problem to solve. It takes optimizing numerous complex, interrelated factors – like where to locate DCs and inventory, when to add capacity, how to optimize transportation – to get the greatest return for the business. These can be “bet the business” type decisions since the consequences will impact the business for years to come. And even harder than choosing the right path, is getting all the stakeholders to support it.
What is the Solution?
There’s both a science and an art to designing a distribution strategy that can optimize service, cost and return on investment, and win the support of the organization. The science includes analyzing historical data to get a clear picture of where the business is today. Sophisticated analytical and modeling tools help investigate the inter-related factors and allow for extensive “what if” analysis to find the best alternative. Strong models and methods can guide you down the path to the best strategy. But “selling” the strategy to company leaders is also important, so rigorous financial analysis, and knowing how to build a business case for change, is also key. What good is a strategy that doesn’t get implemented?
The other half of the solution is the art. It takes a team with pragmatic distribution operations experience. People who have an understanding of the latest business practices – from across industries and around the globe – and who know how to apply this knowledge to your unique business. And most importantly, it takes people who have followed through on strategies and seen them implemented. Without that practical experience, a strategy is just a theory.
Fortna Can Help
Our Distribution Strategy Services help you support growth plans, improve service, reduce costs, increase profit and assure organizational alignment so you can make distribution a competitive advantage. Our Strategy Services include:
Determine the best configuration of distribution facilities: location, size, territory, product mix, service and cost tradeoffs
Inventory Deployment Strategy
Determine SKU affinities, optimize SKU and inventory placement in the distribution network, understand inventory/transportation/service tradeoffs
Flow Path Strategy
Define the optimal flow paths for products from suppliers to customers and/or retail stores, balancing cost, service, risk, quality and flexibility
Benchmark capability relative to industry, peers and desired performance, under-stand gaps and identify strategies and the business justification to close the gaps
Distribution networks are misaligned with the company’s business strategies
Technologies and business practices are changing rapidly
Takes optimizing complex, interrelated factors to get the greatest return