Warehouse Logistics:How we helped a Client reduce Stock-Outs and overall Distribution Costs

Case Study - Problem Description

Business Logistics was contracted by a fast growing specialty food retailer to provide assistance in identifying the optimum location for a new warehouse and for help in setting up new warehouse services. The company experienced strong growth in a certain market area and found it too costly to serve the area from its existing warehouse facilities.

Case Study - Our Strategy

We started by conducting a Logistics Optimization Study to identify the most appropriate location for a new warehouse facility. Once the physical location was identified, we worked to determine the best type of operating arrangement for the client: private vs. public warehouse services. Since the client was in a strong growth mode we felt that public warehousing would be the best choice because these services were easily scalable and had the flexibility to make quick adjustments in order to meet the client's changing growth needs. Our longer-term plan included a subsequent re-evaluation of the client's needs to determine if having private warehouses would be more appropriate and cost effective at a later date.

Our staff identified several suitable public warehouse companies and prepared a Request for Proposal for services from these companies. The RFP was very complete, giving the recipients all of the information they needed to evaluate their ability to provide the required services and to establish competitive pricing for those services.

RFP's were distributed and responses were evaluated in an RFP "scoring" matrix format that we developed to make it easy to compare each company's costs and capabilities. This worksheet addressed tangible as well as intangible qualities of each company and was used by the client to make the final decision in the selection process.

Following selection of the best warehouse choice, we prepared an implementation plan designed to launch the services of the selected provider in a timely and efficient manner. Business Logistics services provided "hands on" assistance with this process and with periodic, routine management and maintenance support.

Case Study - Results Achieved

With the help of our services our client was able to reduce its order cycle time to its customers while reducing stock-outs and overall distribution costs, as savings in transportation was much greater than the added fully burdened costs of the new warehouse facility. As an added bonus, and probably as the result of having an inventory close to the market, sales increased by 17% more than anticipated over the subsequent two years. Our client was very pleased with the results.