Network design
Project Info:
Network design
Restructure GTM distribution
Rationalize Cost
Client: Global FMCG company
Geography: Ukraine
Challenge:
Company was operating in a highly complex logistics GMT (Go-To-Market) network design setup (3 hubs and 20 regional warehouses) which was lacking robust cost management (spend visibility and optimality) and characterized with unreliable speed of service (reaction time);
Infrastructure and transportation related rate increase and logistics inflation was outpacing country general inflation rate, penalizing company profitability and cost competitiveness.
Solution:
Network design study was developed and carried out, covering: delivery point geographic centroids (60K ACB), demand horizon simulations, supply and customer flows, logistics costs and inventory policies;
Scenario modeling was developed with 7 hypothetical network design options, including adjusted replenishment policies, storage parameters, infrastructure capacities and transportation choices;
Redeployed >40 sourcing structure elements relating to geographies and channels (optimized combination of supply, storage, transportation);
Revised and deployed differentiated channel portfolio strategy (product availability) across 4 product categories;
Holistic operational KPIs and financial performance measurement methodology were implemented to fully control network design dynamics (e.g. costs, service, planning)
Result:
- P&L impact (cost reduction): $500 K annually;
- Stock reduction: 15% book value optimization;
- Service level: +4 pp for differentiated channels.