Logistics Management - June 2010

edesign Tips
ing your customers correctly out of the
network you currently have Do you
need to shuffle SKUs, inventory, or
shipping points around These are best
answered by modeling and analyzing
your network.
And, of course, there’s no time to
lose. As the country slowly emerges
from the depths of this recession, Troy
West, Nashville-based assistant vice
president for supply chain consultancy
TranSystems, explains why companies
should seize the day: “With so much
capacity available right now, it’s easier
to negotiate rates with real estate brokers
and carriers.”
In the next few pages, and with the
help of these three experts who have
spent a combined 50 years studying
supply chain networks, we’ll explore
how to make the most out of your
existing distribution network. They all
agree on one single axiom: There is no
silver bullet.
The right distribution network will
always come down to the specific needs
of your business, the needs of your customers,
and the types of products you’re
moving through that network. It’s critical
to accurately model your business
and apply only those relevant tips that
will help you reach that light at the end
of what has been a pretty dismal economic
tunnel.
Tip # 1: One size does not fit all
The high-performing network is usually
one that responds to the specific
needs of each customer. This may
involve designing and engineering
a unique path flow
for a specific customer or
customer segment.
“One size does not fit all,” says
Metersky. “You have to know what it
is that you’re trying to provide from a
cost and service perspective.” He cites
a clear example in major retailers that
have primarily been invested in brickand-mortar
stores, but have now gained
strongholds in e-commerce.
“There’s a fundamentally different
need from a customer service perspective
of what it means to deliver goods
to retail brick-and-mortar stores, as
opposed to delivering goods to a person
at their home because they’ve
ordered off the Internet,” says Metersky.
“E-commerce deals a lot more with
faster-paced parcel shipments, while
the brick-and-mortar stores typically
replenish themselves with truckloads—
but occasionally it can be slower multistop
truckloads.”
Tip #2: Get down to the
nitty-gritty SKU level
Managers need to determine, at the
SKU level, which products should go
direct to store and which should go
through DCs. You can figure
this out once you know which
product should be stocked
and at which DC, including
how much and where, and which product
should be cross-docked.
“For example, if you have a fastmoving,
high margin item, the level of
service and stock-outs that you would
be willing to tolerate are going to be a
lot lower than something that’s a lowmargin,
slow-moving item,” says Metersky.
The goal is to maximize your product’s
profitability by reducing the costs
associated with the movement of product
through DCs and trading partners.
Commercial software packages are now
available, allowing network analysts to
process tens of thousands of SKUs in
just a short amount of time.
Tompkins’ Brockmann relates the
story of a retail client who adopted
a product-line focused network by
June 2010 | WWW.LOGISTICSMGMT.COM Logistics Management 43