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| Client: | Large U.S. provider of medical supplies to the physician market and largest distributor of medical supplies to the long-term and elder care industries. | |||||
| Problem: | Company grew through acquisitions and the resulting network contained over 50 DCs in the U.S. with high fixed and variable costs. Needed to evaluate the optimal number of DCs, improve customer service and increase potential for profitability. | |||||
| Approach: | Use CAPS Supply-Chain Designer to analyze the distribution network and evaluate different alternatives. Create baseline scenario with current transportation modes and costs, fixed and variable costs by DC, and compare with other alternatives. Develop scenarios to determine optimal number of DCs for the network, without compromising customer service levels. | |||||
| Results: | Implementation
of the optimal distribution network will lead to: • Savings of $70 million in gross cost reduction by closing eight DCs in year one • Potential of additional gross savings of $80 million by closing eight additional DCs • Optimal utilization of private fleet for distribution in some markets • About 85% of customers would not need same day service if next day was guaranteed |
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