National Distributor of Safety + Cleaning Supplies
This organization determined there was an opportunity to consolidate from 11 to 7 DCs, but needed to understand exactly how to execute the shift and support to ensure everything would go well. We came in to assess the situation, develop a comprehensive transition plan, and identify key pain points or watch outs. Here’s what happened:
50%
reduction in excess storage fees and penalty charges.
15%
improvement in working capital by addressing stranded, obsolete, and excess inventory
15,000
pallet locations analyzed and optimized
The Problem
Like many companies did during COVID, the company had over-purchased in response to supply chain challenges and experienced a bullwhip effect—demand plummeted, costs dropped, and they were left with excess inventory purchased at high costs.
Complicating matters, they planned inventory four months ahead due to international sourcing, so they were constantly struggling with connecting purchasing to the future inventory receipt and storage needs. We needed to determine how to consolidate their warehouse footprint while improving their systems and giving them new ways to visualize storage demand vs. capacity to ensure they could keep up with the challenge moving forward.
Our Approach
Starting with purchasing, we built a clear profile of all volume that would be arriving over the next 6-12 months to layer on top of existing inventory data and sales projections for the same period. We determined the likley and peak storage needs for the consolidated facility footprint, and then assessed space optimization strategies to push the limits of what would fit.
We considered tactics such as dynamic inventory allocation, re-zoning warehouse inspections, altering product flows through the warehouse, changing the number and layout of dock doors, and generally transforming the boots-on-the-ground operations to match the needs of the business. We built financial forecasts that accounted for both short-term, low-cost rental storage and slow-moving inventory, and we even uncovered >1,300 obsolete items in the product portfolio that had resulted in stranded inventory taking up valuable space.
We balanced inbound logistics to reduce mounting fees and drayage charges, and implemented a strategy of directly unloading containers at offsite facilities rather than at 3PL home bases, eliminating unnecessary trucking costs. In the end, we chartered a course for the warehouse consolidation project to go well, found space for all inventory, identified aged inventory that could be liquidated, and helped the client capture millions in facility savings and cost avoidance along the way.
The Results
50% reduction in excess storage fees and penalty charges.
15% improvement in working capital by addressing stranded, obsolete, and excess inventory
Consolidated 3PL footprint from 11 down to 7 locations
15,000 pallet locations analyzed and optimized
