Distribution Operations Cost Reduction
"Volume and growth can obscure a multitude of inefficiencies."
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Save Now & Later
Finding savings in any distribution operation, whether a manual or highly automated operation, or single to multiple DC supply chains, requires experience and advanced methods.
Once identified, tactical cost reduction opportunities:
-- Can be implemented rapidly
-- Quickly generate payback
-- Better leverage existing tools and equipment
-- Generally require little capital investment or have short payback periods |
With nonstop top-line growth and focus on timely delivery, distribution center managers have not kept on top of training and best practices to achieve efficiency.
Decisions on capital improvements were made to meet the demand which the immediate business dictated and not always for long-term flexibility.
As demand slows and customer requirements are re-evaluated, distribution operations must now be scrutinized to realign practices with requirements to achieve effective and efficient operations.
Distribution centers almost always have the potential for expense reductions and efficiency gains. Now is the time to correct bad habits.
Deficiencies That Drive Up Distribution Operations Costs
People
- Poor Processes
- Excessive Travel
- Unnecessary Touches
- Unproductive Time
- Incorrect Tools
Resources
- Material Waste
- Poor Equipment Performance
- Lack of Performance Metrics and Reporting
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Space
- Obsolete Inventory
- Inefficient Layout and Location Sizing
- Incorrect Equipment
- Overflow Storage
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What We Can Do
Armed with knowledge of your operational needs, we:
- Discover and disclose all performance gaps and opportunities such as process changes, slotting strategies, inventory issues, and best practices.
- Analyze distribution center processes: plan, execute, and performance (staff, management, and support).
- Benchmark practices and costs against an extensive database of comparable companies.
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Qualify and quantify each improvement opportunity.
- Implement opportunities that yield cost reductions.
- Define new cost savings and performance metrics.
- Train DC managers and the team on the new operating procedures.
Our Distribution Operations Cost Reduction (DCR) service yields quick and significant return-on-investment. You gain lower costs and higher levels of service. We reduce costs without disrupting service. We find the hidden costs often buried in status quo processes and unnecessary moves. You can realize savings of 5-30%, which begin in as few as two months.
Business
Opportunities |
Solutions |
Typical Benefits |
Decrease distribution operations spend while maintaining or improving service |
- Audit and analyze current spend; quantify reduction opportunities; define actions to capture benefits
- Review layout, equipment, systems and implementation of best practices
- Analyze efficient use of logistics service providers and overflow storage
- Measure results for on-going success
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10-30% |
Realize return on facility and equipment investments |
- Assess appropriate automation level against needs and identify more value-add system uses
- Review maintenance and performance of existing equipment
- Integrate the use of new equipment and technology features into existing business practices
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10-30% |
Optimize effectiveness
of the distribution management and staff |
- Assess on-site skills and define knowledge gaps
- Analyze business processes and practices
- Identify quick wins and action plans
- Facilitate training and knowledge sharing
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5-20% |
Identify and size other opportunities to improve the distribution operations cost-service ratio |
- Analyze distribution operations opportunities
- Create portfolio of quantified opportunities and implementation strategies
- Document cost/benefit analyses and decision support programs
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10-30% |
Learn More
To learn more, please complete our Information Request form.
Visit the warehousing and distribution page for more resources.
Solving the Cost Reduction Riddle
For a complete overview on aggressive, intelligent supply chain cost reduction on all of the Buy-Make-Move-Store-Sell-Return elements of the supply chain, read the article "The Riddle of Supply Chain Cost Reduction" by CEO James Tompkins.
There are significant cost improvements that can be accomplished with little to no capital investment and with minimal resources. For detailed information, see what top performing companies are doing in areas such as transportation, inventory and outsourcing.
Bottom Line Impact Now:
Ways to reduce costs in specific sectors.
Five Key Opportunities to Reduce Distribution Costs
Three Key Opportunities to Reduce Transportation Costs
© Tompkins International,
Inc., All rights reserved.
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