Supply Chain Use Case: Flow Path/ Net-Landed Cost Reductions/ DSD vs. WHSE
Use Case Objective:
Optimize product flow path for opportunity items in collaboration with the Network Optimization Team. Product flow path could refer to deciding if an item should be in the warehouse vs. DSD or if an item should be each pick vs. full case. It can also refer to the path the product takes through the network to arrive at the store.
Use Case Benefits: Addressing opportunities to optimize product flow path can lead to improved net landed cost to retail, increased freshness, and a reduction in working capital.
Process/Analytical Steps:
Metrics to Review:
1. Determine if the item has any legal, safety, damageability, size-constraints, or other restrictions which pre-determine its flow path 2. Determine which path to evaluate: DSD vs. Warehouse, Each pick vs. Full Case, or alternate means for the product to be transported. 3. Review product attributes and movement. There are existing standards that the team uses for full case determination: if item cube is >1.7, if item weight is >35 lbs., if sales/store/week are >.25 4. Work with the Network Optimization team to review all variables relevant to the flow path in question: • Transportation: FOB, Freight charges, Backhaul allowances, Rail, UPS, DSD, DSD Stop Charges, Pallets, RPC’s, X-Dock Costs, Transit Time, Fuel • COGS: Packaging, labels, pack size, pallet modules, weight, cube, warehouse handling costs, storage handling, up-charges, receiving put away/let down/picking costs, price brackets • Working Capital: Inventory levels at DC and store, forecasts, turn, swell allowances, payment terms, marketing funds, NPI discounts, efficiency program allowances • Sources: Direct to store, Direct plant ship to DC, X-dock, mixing center, consolidate store drop, vendor’s ability to ship via another channel
• Item velocity • Item dimensions/attributes • Net landed cost • Metrics to left in step #4
Teams to Involve/Collaborate:
• Network Optimization Team - to validate opportunity and analysis • Demand (Forecasting, In-Stock, Item Integrity) - for any proposed changes • Category Management - for any proposed changes
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