Why Do Distribution Networks Change?
Yes, all Distribution Networks change.
Or at least they should do.
Here are some reasons that the requirements of your Distribution Network might change over the years.
so what do i mean when i say why do distribution networks change a distribution network is not a set and forget thing it’s very much a living and dynamic thing if you think about it and I’ve been helping companies for over 25 years fix up their distribution networks and what i wanted to do this week is to share with you some reasons that distribution networks don’t function as they should anymore and some things that you really need to look at in your own distribution network so first of all what are some of the signs maybe that a distribution network isn’t operating as well as it could the number one that people talk to me about is rising cost whether that’s you know cost as a percentage of sales or unit costs or just overall sort of aggregated costs they say rob you know our costs are increasing all the time we really need to have a look at our distribution network it’s becoming very inefficient so cost is the the first signal that you’ll see but why are the costs increasing we need to kind of lift the hood on that and understand what’s causing it very often with that you’ll see poor service and typically this is because the deployment of inventory in the network is not fantastic there’s a lot of double handling and all of that can lead to poor customer service and the rising cost of course so that’s another thing to look out for um running out of storage capacity that’s
another one that’s very common I talk to companies almost every week about things like you know we’re running out of space we’ve got extra off-site storage you know that’s an alarm bell we need to reconfigure our warehouse to fit more in these things are indications that maybe the distribution network hasn’t been looked at for a while and maybe it’s not quite doing the job it was designed for why is that well things change constantly changing and i don’t need to remind you about the changes that we’ve experienced over the last couple of years so we’re shooting this in what are
we’ve had you know two years of pandemic and huge supply chain disruptions but these kinds of changes go on all the time maybe not as extreme but if you think about
it your sales volumes are always changing in a distribution network they might go up they might go down you might have gained other businesses brought on new products so that product mix is constantly changing channels that’s a huge one that we’ve seen over the last couple of years particularly distribution channels themselves change and so that can impact how your distribution network operates in terms of where warehouses are located how inventory i deployed the transport that you’re using for that final delivery service levels change wow have they changed over the last couple of years so much more home delivery people wanting things much quicker much more flexible the demands placed on a distribution network have increased substantially over the last couple of years so all of this impact the structure of that distribution network its ability to operate at a reasonable cost and its ability to deliver fantastic service so what are some of the quick fixes that people do and this is very common which it’s kind of like throwing petrol on the fire to a degree they’ll put more warehouses into the network particularly additional warehouses you know very often called off-site storage they’ll put more inventory into the network and we’ve seen that of course over the last couple of years utilizing more inventory as a buffer against you know irregular or inconsistent supply we see people changing transport carriers shopping around trying to reduce cost perhaps get a better service maybe because the product mix has changed they need different carriers and these things are a little of a short-term focus and that’s fine you know you’ve got to keep that distribution network operating efficiently and you need to be identifying these things that you can fix in the short term but the short term answers are not going to keep you going for very long so what i would suggest is that you ask yourself what is driving these changes the changes that you’re seeing be it increasing cost or poor service or running out of capacity what’s the underlying cause and you need to understand that before you can start developing solutions so it would be great for me to sit here and say if you’re seeing any of those disruptive symptoms in your distribution network here’s what you’ve got to do but every distribution network is different so what I would like to do is to ask you to look at your distribution network lift the hood on it where things are not operating as efficiently as they should look for those underlying causes service changes in product mix changes in order profile