PROBLEM
The following problems and challenges were presented:
- The need for a methodology that would determine the necessities and configuration of the distribution network.
- The identification of possible scenarios for redesigning the distribution.
- To redesign the operation processes for the distribution centers.
- To estimate the capacity of the centers with the new operation process.
- To establish whether it is feasible to operate with mega distribution centers and determine what restrictions must be overcome.
- To identify labor union restrictions and their implications for the distribution.To simplify group operations (cost reduction) without affecting the level of service offered.
SOLUTION
Our approach was divided into two large initiatives:
- Defining the optimal operation process of the distribution centers.
- Creating a master plan to configure the distribution network.
In order to tackle both initiatives, we developed a model for distribution and costs of the current distribution network; we generated possible future scenarios that affect distribution; and we analyzed practices that would generate a unanimous vision of the current and future operation in terms
of:
- Number and location – Are the current Distribution Centers, in terms of location, size and quantity, needed to cover the demand?
- Productivity – What opportunities are there to increase the productivity of the current Distribution Centers, in terms of the capacity of the routes, investments and costs?
- Operation Plan – What is the best way to operate (receive cargo, store products, load routes) the distribution centers?
- Role – What type of distribution centers are necessary?
- Escenarios – How feasible are the future demand scenarios and what are the economic results of such scenarios?
BUSINESS BENEFITS
Cost Reduction
Benefits for better use of personnel 20pp
Benefit from reduction of product shrinkage 46pp
Distribution Centers 37pp
Operation Capacity 12pp
Reduction of logistic costs 1.1pp
Postponing investments 13pp*
*On logistic costs
About Sintec
Sintec is the leading consulting firm focused on generating profitable growth and developing competitive advantages through the design and execution of holistic and innovative Customer and Operations Strategies. Sintec provides a thorough and unique methodology for the development of organizational competencies, based on three key elements: Organization, Processes and IT. Furthermore, Sintec has successfully carried out more than 300 projects on Commercial Strategies, Operations and IT issues with more than 100 companies in 14 countries throughout Latin America. Our track record of more than 25 years makes Sintec the most experienced consulting firm in this area of expertise in the region.
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