Distribution transformation
cuts costs for utilities supplier
$28.7 million
Projected savings over 5 years
24,585
Number of SKUs for which Grant Thornton engineered weights and dimensions
At a glance
Client
Utilities supplier/distributor
Industry
Energy/distribution
Our role
Reimagining distribution centers
Our solution
New conceptual facility layout
New distribution center model creates savings
Scenario
A company that provides supplies, products and solutions to utility companies struggled to manage distribution due to high demand and volumes.
Approach
Grant Thornton helped create a distribution center capacity model and conceptual design to assist with the transition from a local branch model to a regional model.
Result
Through the model change and a new, data-driven approach, the company’s projected savings in space, labor and costs was $28.7 million over five years.
Scenario
Addressing distribution model capacity
A company that supplies utilities with essential products and solutions found that its existing local branches had taken on distribution center responsibilities for which they were poorly equipped. The locations didn’t have adequate storage space, efficient processes to support high volumes, or warehouse management system technology or infrastructure to support their operations.
The company also lacked appropriate physical product data on weights, dimensions, pack quantities and stackability to support efforts to model its distribution centers. Also missing were standard warehousing processes, engineered labor standards, uniform storage and slotting strategies, and consistent technology use across branch facilities.
Approach
A data-driven route to a new distribution model
Identifying the characteristics of the inventory was an important step in the distribution improvement process. The Grant Thornton team used Alteryx to manage large data sets and engineer missing weights and dimensions for about 70% of our client’s product portfolio. Applying a multi-tiered weighted average methodology to various product subgroupings helped accomplish this task. Meanwhile, the team created an automated method that enabled our client to update engineered weights and dimensions data as new product measurements were captured.
The team also built a distribution center capacity model with variable inputs to provide facility space requirements, labor requirements and capital expense estimates for a wide range of site selection scenarios.
To maximize distribution center throughput, Grant Thornton designed a conceptual facility layout based on capacity model outputs and requirements. With the necessary data in hand, our team worked with real estate partners to identify facilities that could possibly be used for a future-state distribution center.
Result
An automation-ready design, fit for the future
The capacity model and conceptual design the Grant Thornton team created assisted our client with its transition to a regional distribution center model. Weight and dimensions were engineered for 24,585 SKUs out of 38,664, and our team provided future-state design options and best practices for a phased transition approach.
Our team evaluated new material handling equipment and warehouse automation options for the company, with expected return on investment data provided. Through consolidating and streamlining of data hierarchies, our team improved our client’s master data. Our team also went beyond and conducted an analysis of state tax incentives to support the new distribution center site location.
The projected savings in space, labor and costs is $28.7 million over five years.
Content disclaimer
This Grant Thornton Advisors LLC content provides information and comments on current issues and developments. It is not a comprehensive analysis of the subject matter covered. It is not, and should not be construed as, accounting, legal, tax, or professional advice provided by Grant Thornton Advisors LLC. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this content.
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For additional information on topics covered in this content, contact a Grant Thornton Advisors LLC professional.
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