By Kim Brown
IMPLEMENTING YOUR DISTRIBUTION NETWORK PLAN: PART TWO In part one of this series, we covered the basics of distribution network planning. Now, we’ll show you the steps to get the ball rolling.
ou have created a distribution network plan that incorporates your “go to market” strategy, inventory and logistics strategies, as well as supports your customers’ expectations. Now what? Some logistics professionals are hesitant to take this next step, fearing the task to be too daunting, but the process doesn’t have to be like that. For the purpose of this article, we will assume the plan is to add new locations and/or reduce or move current location(s). Why would a plan require you to do this? Maybe it is because your customers’ expectations have changed to expecting product sooner, and the plan supports that it is less costly to add a warehouse closer to the customers than it is to ship next day air. Perhaps your analysis suggests that the current locations are not in the right place to reach your current customer base as well as you could be doing. Or maybe the plan reveals that you have more warehouses than you need/can afford. Whatever the reason, if you accept the plan, there are
a number of steps that you need to do to implement it. STEP ONE Create a cross-functional team, and develop a budget! All areas of the business need to be represented in this endeavor. Business will be impacted, and everyone needs to be on the same page as to what those impacts are and be prepared for them. STEP TWO You need to prioritize the order in which you are going to implement your new strategies. Which new location provides you with the most bang for your buck? Look for the density of customers who will get an improvement on time in transit. This is a key step where the footprint maps of your carriers come into play. STEP THREE You need to select a new location. You have determined the area that you want to add; now you need to narrow it down to the actual city/location. This is where you can have cities vie for your relocation. In-
NOVEMBER-DECEMBER 2016 | www.PARCELindustry.com
centives can be offered to you, such as workforce training dollars, low interest loans to help you with your move, grants for adding new jobs in the area, etc. One thing to keep in mind is where your carriers are located. A rule of thumb that I use is to stay within a 30-minute circle of where your primary carriers are located to allow for the latest pickup times available. If your primary carrier is a parcel carrier, also make sure that the hub you are going to be located by is one that has all of the sorts! You want to be serviced out of the main hub – not a spoke! Another thing to note is the caliber of the local workforce as well as the availability of enough employees. STEP FOUR You now need to make the decision between leasing and buying. Look for guidance from your company’s strategy around real estate. Is leasing more preferable than buying/building? The time to open a leased building is typically half the time it takes to build or purchase your own building. A rule of thumb is