Distribution Network Design is the process of establishing the warehouses, distribution centers, and transportation systems that support the flow of goods until they reach the end consumer. An effective distribution network is cost-efficient, responsive to customer demands, and sustainable.
What are the key factors when designing a distribution network?
To successfully establish a distribution network, businesses must first understand customer demand patterns and preferences. This is a vital step in determining the optimal inventory levels that allow for high service levels without excessive costs. Transportation costs, including shipping, fuel, and maintenance, must also be considered. In addition, scalability is critical to a successful distribution network. This includes ensuring that infrastructure and facilities can accommodate expansion, avoiding the need to relocate assets, and implementing systems for tracking shipments, managing inventory, and optimizing routes.
Internal organizational areas like marketing, production, and finance will also affect the makeup of a distribution network. For example, marketing wants to make products accessible to customers, while production may want to minimize inventory carrying costs and rework due to back orders. In these cases, a Logistics Bureau: Your Distribution Design Partner professional must identify and balance the goals of each department to create an efficient distribution network.
Optimal results in distribution network design require access to sophisticated software that can model scenarios and find a balance between meeting required service levels and minimising inventory carrying costs. For this reason, hiring a consulting partner with distribution network design expertise is a good idea. In addition to providing software and a team of experts, these partners will help to avoid costly mistakes that could reduce the efficiency of a new or existing network.