Are you confident in the efficiency of your current distribution methods?
If it’s been five years or more since your last review, there’s a strong chance that inefficiencies have crept in without you knowing.
Watch the video below to explore the potential issues and learn how to ensure your distribution remains as effective as possible.
Reviewing Your Distribution Network: Why It’s Essential
If you haven’t reviewed your distribution network in the past five years, now is the time to do so. Distribution networks are complex systems with many moving parts, including stockholding locations and various transport modes. Regularly reviewing your network is crucial for ensuring it remains efficient and continues to support your business’s growth effectively. Whether you handle this review yourself or seek external help, identifying and addressing inefficiencies can lead to substantial improvements and operational benefits.
Mergers and Acquisitions: A Key Trigger for Review
One of the primary reasons to reassess your distribution network is during mergers and acquisitions. Over the years, I’ve seen many instances where companies needed to integrate their distribution networks following a merger. This process involves optimizing and merging two distinct networks to achieve the anticipated synergies. Effective network integration can significantly enhance efficiency and reduce costs. If your company is involved in or considering a merger, now is an ideal time to evaluate and possibly reconfigure your distribution network.
Inefficiencies and Expanding Product Portfolios
Another common issue, particularly in larger organizations, is the growing inefficiency of the distribution network as product portfolios and customer bases expand. Facilities may become cramped, transport networks may operate less efficiently, and overall performance can decline. Signs of these issues include rising costs and declining service levels. Regular evaluations help identify these inefficiencies and allow for necessary adjustments to maintain optimal performance.
New Distribution Channels and Service Offers
The landscape of distribution has dramatically shifted with the rise of omnichannel strategies and new service offerings like home deliveries. Traditional distribution models often struggle to accommodate multiple sales channels effectively. Companies entering the online space or offering new services might face challenges integrating these channels into their existing network. Deciding whether to modify existing warehouses or develop new ones tailored for these new channels is crucial. Regular reviews can help address these challenges and ensure your network remains capable of meeting current demands.
Cost Changes and Their Impact
Changes in costs—such as fluctuations in freight rates, warehouse demands, and other expenses—can have a significant impact on your distribution network. For example, recent disruptions in freight, like floods affecting road transport, highlight the importance of regularly reviewing and adjusting your network. Additionally, varying ocean freight costs can influence your import strategies and overall network design. Regular reviews help manage these cost fluctuations and ensure your network remains competitive and cost-effective.
Related articles on this topic have appeared throughout our website, check them out:
- How to Operate Your Distribution Truck Fleet at Less Cost
- The 7 Principles of Warehouse and Distribution Centre Design
- 7 “Costequences” of Distribution Network Misalignment
- Do You Know the Signs of Poor Distribution Network Design?
- Spotlight On: Robots In Distribution Centres
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated July 19, 2023, under the title “Why Should You Review Your Distribution Network?“.
