Customized Process Re-Engineering
Challenges & Objectives
Increase growth and reduce risk by controlling third party distribution overhead expenses and distributing product to ensure point of sale availability.
Strategy
Manage vendor performance to ensure accurate delivery and just in time models to Retail Support Centers, purchase less from domestic vendors and source more products from foreign manufacturers.
Customized Solution
Overall reduction to the supply chain was achieved by managing business surges and seasonal spikes without increasing year-round overhead expenses. Improved throughput was realized and consistent transit times were measured, allowing for reduced staff which in turn reduced over-head investment and risk.
A nationally recognized retail co-op chain needed to include imported merchandise into their product offering. With more than 90% of their 50,000 items being provided by domestic suppliers, their logistics program was mainly designed to focus on retail fulfillment.
The existing program for their Far East imports had each vendor shipping directly to the company's U.S. distribution centers. The company's import department was reacting manually to handle communication and follow-up.
This posed issues to transform the way they handled their transportation fulfillment, vendor management and un-budgeted internal expansion. Carrier reduction and order tracking was a natural starting point.
We began by addressing the unpredictability of the transportation fulfillment cycle. This uncertainty made it difficult to ensure that the product was available at retail for advertised sales and seasonal demand. This left their distribution centers with surplus and urgent orders were being processed on a daily basis.
Vendors were often late with production and the mode of transportation continuously needed to be upgraded to a more costly model. This process involved multiple hand offs and disruptions resulting in eroded margins.
Our approach was to develop a strategic plan to consolidate multiple vendors and products at origin and establish a U.S. west coast port for a de-consolidation and staging center.
The renowned model our teams implemented was designed with best in class import program characteristics. We solved the transportation fulfillment issue using Distribution Services with flexible space/capacity and Domestic Load Planning. We solved the vendor management issue with Perpetual inventory control (6 month cycle) and Consolidation at Origin. We solved the manual processes and unplanned internal process increases with Purchase Order Tracking, Import Freight Payment Customs Brokerage, EDI communication and In-House Account Management.
Results
- Reduction in Logistics Costs: 28%
- Improvement in Inventory Turns: 29.3%