Published March 16, 2017
After recently investing in two specialty electrical retailing companies, a private equity group wanted to know if it could combine both companies’ operations into a single network. It wanted to analyze the distribution processes, facilities, and network to see if the consolidation would be a plausible solution.
| Company |
The company is a private equity group specializing in middle market leveraged buyouts, recapitalizations, and partnership financings. The firm invests in companies with enterprise values between $200 million and $1.3 billion. Two of its investments were in related specialty electrical retailing and service companies in Europe.
|
| Challenge |
Given the similarities of the product, services and markets served, could there be greater leverage by combining the operations into a single network? The two companies approached their distribution operations with dramatically different strategies for labor, owned/leased facilities, automation levels, IT systems, and transportation policies.
|
| Tompkins International’s Role |
- Evaluate two companies’ distribution processes, facilities, and network to determine if they could be combined into a single network. Determine best practices, changes required to integrate operations, assessment of facilities, and development of recommendation on investments, timing, facility selection, and road map for moving forward.
- The evaluation included: Combined retail store networks for multi-stop deliveries; local variation of labor costs and productivity; impact of automation versus space, labor, and productivity; compared various tiered distribution models; and assessed various policies and procedures.
|
| The Results |
- The best approach for long-term consolidated distribution operations identified significant savings, including: reduced labor costs by 27%; lowered cost per line processing by 28%; saved 13% in overall transportation spend; reduced facility requirements reduced by 27,000 square meters
- Improved home delivery service by consolidating volumes to transit points
- Indicated that inventory visibility and tracking could be significantly improved through upgrade of warehouse management system (WMS) to activate existing capabilities
- Identified economic value of relocating some of automated material handling equipment
- Made recommendations to leverage the high value management skills in the consolidated operations
|
