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Food & Beverage

NEEDS-BASED RESULTS

 

Food & Beverage

SITUATION

Large soft drink bottler/distributor needed help to develop a formal methodology to calculate the economic impact associated with closing or moving warehousing facilities.

DRIVER GOAL

  • Establish methodology to assess economic impact of changes in the distribution system.
  • Calculate the economics of several prescribed scenarios.
  • Identify an implementation roadmap.

RESULT

  • The company continues to utilize the custom tools to analyze other network alternatives. The “winning” scenario will become the basis of their long-term plan.
case study image, CS-210 large

Case Study

Optimize Distribution

Issue

One of the largest soft drink bottlers/distributors in the nation, whose distribution network had grown significantly as a result of acquisitions, engaged The Highland Group to develop a formal methodology to calculate the economic impact associated with closing or moving warehousing facilities.

Highland Approach

The Highland Group began by establishing a multidisciplinary Network Scenario Team (NST) and facilitating the identification of five specific warehouse close/move scenarios to form the basis of a comparative analysis. The team identified, collected and modeled various data and created custom tools to calculate site, distribution and resource requirements for each scenario. The resulting information was used to create a detailed roadmap to the optimum distribution solution.

Actions Taken

  • Customized a Logistics Network Tool to meet client distribution requirements: length of work day, type of vehicle and capacities of vehicle.
  • Customized the Site Sizing Tool to identify the required size of each facility, given it’s demand in each scenario.
  • Identified variable costs associated with transportation from the bottling facility to the warehouse, the warehousing costs and the costs to deliver product to the customer.
  • Modeled six months of data at the customer invoice level to validate the model against the actual P&L.
  • Calculated the economic impact of five identified scenarios using geo code data and the variable costs.
  • Identified non-economic criteria that should be considered in the final decision.
  • Trained two employees to run additional scenarios using the Logistics Network Tool and Site Sizing Tool.
  • The Network Scenario Team proved to be such a strong resource that it continued to exist beyond the initiative with the responsibility of identifying additional scenarios and acting as the clearing house for new scenario requests from management.
  • While the internal belief was that fewer warehouses would be a more cost effective solution due to the reduction in operating costs, some consolidation had already been completed and the client was reaching the point of diminishing returns for warehouse closures. It was determined that other network variables would hold greater weight in future network decisions.

It was determined that other network variables would hold greater weight in future network decisions

Related Information

subject matter-based

Client Partner

Financial Services, Marketing & Consumer Products

Petrina is a creative, hands-on executive with over 25 years of international business experience with a proven track record of working collaboratively across traditional boundaries and solving complex operational issues. She previously served at the senior executive level of one of North America’s leading financial institutions and several global consulting organizations. There, she led engagements serving industry-leading clients in United States, Canada, England, Germany, Austria, Switzerland, Norway and the Netherlands.

Project Leader

Sales, Marketing & Consumer Products

North America

Bill is a senior project leader with more than 20 years of hands-on experience in assisting multinational companies by deploying his expertise in Lean Six Sigma and Business Process Management tools, tactics and strategies. He has deep expertise in sales and marketing improvement, supply chain optimization, fixed-cost reduction, channel management, total production management, balanced scorecards and post-merger integration.