Stories
European warehouse footprint design
European warehouse footprint design
Challenge
A Swedish industrial company needs to review its warehouse footprint in Europe. The current footprint includes central, regional and local distribution centers in combination with local stock at sales companies, with a service level that does not meet customer expectations in full. The challenge is to design a centrally governed warehouse footprint that enables shorter lead times and at the same time less capital tied in stock.
General solution requirements:
- Reduced overall lead time
- Increased stock availability
- Decrease of stock locations
- CO2 impact
Solution
Target was set to reach 95% total service level for spare parts and accessories with new footprint design. Hypothesis generation resulted in five scenarios selected for in depth analysis. The simulation differentiated the scenarios based on their impact on lead time service and stock availability.
The scenarios were, beside service level, evaluated on the following main parameters:
- Total cost level
- Capital tied
- Lead time
- CO2 emissions
Impact
The business case result concluded that it is possible to meet the future demand of 95% service level (on time in full) for spare parts and accessories in a more cost effective way.
The following potential can be reached with the new set up:
- 24 hours lead time for spare parts and accessories
- Increased service level to 95%
- Decrease in stock locations
- Reduction of capital tied
- Overall cost reduced by 35%