Supply Chain Strategy

Summary

The aim of the project was to define the practical options for the client’s supply chain to support their planned growth over the next three years.  

Project Background

The retail client had grown organically over the last five years and had reached a pivotal point where a review of the supply chain was necessary to support future growth.  This was particularly important since future growth may be more aggressive than initially planned, due to acquisition or expansion into neighbouring countries.  The client had defined a number of possible growth scenarios that required modeling to assess the implications on the existing supply chain and understand the future requirements.

Approach

During the initial stage of the project, LCP conducted a high level review of the current supply chain to ascertain the existing issues and challenges.  This included site visits and an analysis of supply chain data to understand and form the business profiles, and identify areas of development. 

A logistics flow model was developed to model and assess the different growth scenarios.  The initial diagnostics enabled the definition of the key volume profiles to input into the model.  These volumes were overlaid with each scenario to synthesise the future high-level warehousing and transport requirements for the next three years.  The flow model fed a separate location model to determine the optimal number and location(s) of distribution centres to service the increased store volumes.

LCP held workshops with the client to discuss the outcomes of the supply chain analysis and review, and to feedback the findings of the modelling exercise

Success Factors

LCP utilised our extensive experience in areas such as 3PL contracts, warehouse operations, network design and logistics in Europe to formulate a clear and comprehensive set of recommendations to the client.

The validation of the business profiling and full discussion of the key model assumptions and parameters ensured that the client was comfortable with the methodology and could clearly understand the outputs.

Results and Benefits

As a result of the supply chain review and growth modelling, LCP developed the change solution for the client.  This detailed the key reasons for change, the characteristics and location of a distribution centre, and the time horizons and indicative actions required for the client to manage the future store network.

LCP identified a series of operational considerations that would enable the client to manage the increased volume to gain greater efficiency and economies of scale in inventory, transport and planning.

LCP delivered a road map to give the client a view on the indicative timing of key operational changes and decisions, which would allow them to define their strategy at a corporate and operational level.  The road map included a series of recommended short, medium and long term actions that the client should execute to manage the impending change. 

The project deliverables provided clarity and confidence to the client on the major supply chain changes that the company is facing over the next few years and when and how they should be managed.