An efficient distribution network is vital to companies that deliver products and services to customers. Designing an efficient distribution network helps you deliver promptly and cost-effectively. Through the distribution network, you can connect your company with production facilities, warehouses and transportation routes, helping you meet customer demand.
When designing a distribution network, there are several factors you must consider to ensure your network is successful and to ensure successful collaboration with third-party logistics management teams.
Understanding Customer Requirements
The first key to designing a successful network distribution is to understand the needs of your customers and their expectations.
You should focus on answering questions like what delivery timeframes your customers expect, the stock levels expected at customer locations and the delivery frequencies needed for efficient operations.
Understanding unique customer needs enables you to come up with a tailored distribution network that meets those demands. You can set KPIs around customer service factors, such as on-time delivery, fill rates, and inventory accuracy. For this, you should conduct thorough customer research and analysis that can help you plan out a customer-centric distribution network.
Location Optimisation
You need to optimise your locations and operations to maximise efficiency. Facilities such as warehouses, cross-docks and stocking points are imperative.
Your first goal should be to strategically choose locations based on proximity to suppliers, transportation routes and key customer markets. This will help you minimise overall transportation costs and delivery times while still providing the desired coverage of customer locations.
When considering the location of your facility, you should also consider factors such as:
- Real estate costs
- Labour availability
- Transportation connectivity
- Compliance with local regulations
- Capacity for future growth
It is essential to take the time to localise your shipping fulfilment needs. This will help you save money on long-term shipping and give you an edge over your competitors in the industry.
Inventory Management
Inventory management is going to play a critical role in your distribution network. You need to maintain optimum levels of inventory at your fulfilment locations.
While you want to maintain optimum inventory levels, you also want to minimise inventory carrying costs without having items running out of stock.
The ideal balance will vary depending on the location and local demand. You should conduct an ongoing analysis and planning to help optimise the flow of goods through the network.
Transportation Optimisation
An optimal transportation network will help to move products efficiently across the supply chain. When deciding on issues such as transportation modes, routes, capacities and carrier selection, you should know that they impact costs and service levels.
Your goal should be to design a network with balanced transportation costs, speed and reliability in deliveries.
You can also use transport management systems in your operations, transloading practices and shipment optimisation analytics to help you reduce mileage, increase asset utilisation and improve routes.
Analysing Deeper Data for Effective Network Design
Customer locations and transportation options are vital analytics when designing a distribution network. However, your analysis should go deeper. You need to work with a team that can help you gain insight through different data types that will give you a better picture of your distribution needs and help you plan upcoming improvements better.
Some of the analytics that should feature in your distribution network design should include customer order history, a review of past product performance, inventory turnover, warehouse capacity, throughput rates of centres, competitor successes and market conditions.
Your distribution network will be a competitive advantage in your market environment, especially if your business takes a customer-driven approach. You should take a strategic approach and optimise the above-listed factors to help you build a strong, efficient and responsive distribution network.
You also need the assistance of supply chain leaders and solutions through automation and mechanisation in the movement of goods by equipping your warehouses and facilities with the right equipment, including trolleys, dollies, and automated load carriers.
Conclusion
LKE provides a wide range of mobility solutions for companies and facilities looking to maximise customer experience through efficiency in their distribution network. With our range of solutions, you can begin on the right footing with your distribution network by keeping things moving within your facilities and while delivering to your trucks and other transportation modes.
