April, 2021

The Long and Short of Designing a Distribution Network

The Long and Short of Designing a Distribution Network

I’ve noticed a trend in recent years in that when businesses want to check their distribution networks or design a distribution network, they immediately jump into loads and loads of detail. Maybe it’s because the tools are out there to do it now, but I’d like to highlight other approaches that are less time-consuming and resource-hungry. Four Ways to Streamline Your Network Design I’ve been doing network design for all of 25 years. We did it all on spreadsheets in the early days because there were no specialist tools around. Now there are great tools, such as Supply Chain Guru and others. But let’s wind the clock back a bit and look at some of the simple ways that network design can work before focusing on the more complex models. 1. The Back-of-the-Envelope Approach There are some fairly simple back-of-the-envelope approaches that you could take. You could do these on a simple spreadsheet or even a whiteboard. Let’s imagine that you’re operating in Australia, which is rather awkward for distribution because most of the population lives on the east coast and about 7% lives way over on the west coast. People who are new to the country say, why can’t we just have one national warehouse? The problem is, it takes three or four days to traverse from coast to coast. For that reason, companies will usually establish one warehouse on the east coast and another on the west coast, depending, of course, on the service offer. Bring in the Whiteboard How would you do a rough check on a whiteboard? You might look at your existing costs with an east coast warehouse and then, very simply, you could compare the added cost for a west coast warehouse. You might ask the following questions: What’s the total amount of product we may have to move across the country?What’s the transport rate to move it?What’s the extra line haul or trunking cost? We need to factor all of that in when comparing what it costs to serve customers directly from the east coast. So you have to look at the line haul cost against the added cost of setting up a warehouse in the west. That’s a simple back-of-the-envelope approach. You don’t need to do a months-long study with specialist tools to work that one out. 2. Spreadsheet Models Some 20 years ago, we used to build some very complex...

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Losing Money on Customer Orders and Supply Chain Profit Leak

Losing Money on Customer Orders and Supply Chain Profit Leak

Up to 14% of customer orders could be losing money in your Supply Chain. Why? Watch this episode: Editor’s Note: This post was originally published on February 24, 2021, under the title “Losing Money on Customer Orders and Supply Chain Profit Leak” on Logistics Bureau’s website. Best Regards,Rob O’ByrneEmail: robyrne@logisticsbureau.comPhone: +61 417 417...

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Why 3PL Relationships are Fraught—And How to Manage Them

Why 3PL Relationships are Fraught—And How to Manage Them

Third-party Logistics (3PL) companies are often accused of providing such poor service that their relationships with clients break down. In reality, though, there’s a host of reasons why 3PL relationships turn sour—and very often the blame can be laid at the door of the client. Let’s take a look at three typical client issues that can easily send a 3PL relationship off the rails. Fix These Issues to Improve Your 3PL Relationship 1.  Failure to Communicate When you go to the market for 3PL services, are you being clear about what your service expectations are? As you’re going through the RFP/RFT process, you need to ensure absolute clarity, so the bidding 3PLs understand the specific outcomes you seek from your logistics outsourcing. First and foremost, communication and clarity of expectations are very important. Make sure that you provide lots of detailed information about your products and customers so that the bidders have a full understanding of the operation to be outsourced. Right from the start, make sure that you state very clearly: The elements of your operation that are to be outsourcedWhat your expectations areHow you plan to measure the contractThe KPIs that you are going to use Be upfront about how you want the relationship to work, and I would suggest that you include a draft contract during the bidding process. What to Include in a Draft Contract The draft contract should set out: How you want to manage the relationship contractually and commercially,All of the KPIs that you expect to be measured,The targets that you want to achieve. Maybe you also want to think about some sort of gain share or bonus mechanism to negotiate into the contract. Perhaps you want to set some minimum targets that you want to be met. If the 3PL drops below those, it has to rectify the situation. If it consistently reaches above those targets or comes up with some improvement programmes to reduce costs, you might want to offer a bit of a bonus or a profit share. 2. Failure to Share Data Another major issue is that people don’t share data enough. When I see 3PL relationships going off the rails, 55% to 65% of the time it is because accurate data wasn’t being shared sufficiently from the outset. As an example, we are currently helping a couple of clients with 3PL issues, and I can tell you that...

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Secrets to a Good Systems Implementation

Secrets to a Good Systems Implementation

One of the mistakes, most businesses make, is on systems implementation. In this episode, Suuchi Ramesh, as a Supply Chain Technology Expert, tells us the key things to focus on in having a great system implementation. Related articles on this topic have appeared throughout our websites, check them out. Robobyrne: Asset Tracking Using Bluetooth Supply Chain Secrets: How to Persuade the Logistics Team to Invest in WMS Benchmarking Success: Technology as a Driver of Last Mile Delivery Performance Dawson Consulting: The Realities of Solving Business Problems with Supply Chain Technology Editor’s Note: This post was originally published on February 17, 2021, under the title “Secrets to a Good Systems Implementation” on Logistics Bureau’s website. Best Regards,Rob O’ByrneEmail: robyrne@logisticsbureau.comPhone: +61 417 417...

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Supply Chain Digitization

Supply Chain Digitization

What is it all about? What are some of the trends? Suuchi Ramesh, Founder and CEO of Suuchi Inc., is back to share her insights. Editor’s Note: This post was originally published on February 10, 2021, under the title “Supply Chain Digitization” on Logistics Bureau’s website. Best Regards,Rob O’ByrneEmail: robyrne@logisticsbureau.comPhone: +61 417 417...

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