At CSCMP’s annual meeting, I got the chance to listen a talk from Benjamin Moore on how they redesigned their supply chain. Here were the top five lessons I gleaned from the talk (you can find this list and more details in the full article on Supply Chain Digest):
- Expect a study to take 3-4 months. People new to network design want to know how long they should take. Three to four months is what I’ve seen and heard about from many other projects. The data cleaning and validation will always take longer than you think. And, it takes time to analyze different scenarios and figure out which one is best for your businss. It is possible to do studies faster, but this is usually only true for repeat studies.
- You need to keep the study on track. It is very easy to expand the timeline by adding too much detail, collecting too much data, or running too many scenarios. Although it is hard to know how much is too much, Zuern suggested that you determine the goal at the start of the project and keep the team focused on that goal throughout the project.
- Don’t make changes for small gains. The results of the study showed that some of the warehouses were located about 100 miles from the optimal location. Although moving the facilites would have had some benefit, it would not have been enough to overcome the cost of the change.
- Question central storage of special products or slow movers. Benjamin Moore had previously been storing some products centrally. This was hurting their service level. In the new design, they decided that it was worth the extra inventory to improve service (and reduce some transportation costs).
- With today’s emphasis on same day delivery, warehouses in crowded urban or suburban areas may make sense. Benjamin Moore views quick service to the stores as a competitive advantage. The overnight requirement is just one way to express that. In fact, the idea of a warehouse within a city is very appealing because it gives them the ability to do same day delivery and will-call for their customers with large orders. Amazon is also doing this. For Amazon’s 1- and 2-hour delivery commitments in New York, they leased the 5th floor of a building right across the street from the Empire State Building. Doing this lease in Manhattan required a change in mindset at Amazon. The internal real-estate team was used finding large tracts of land out in the country for the fulfillment centers and Manhattan certaintly didn’t fit this profile. But, if you want really fast delivery, you have to be physically close to your customers.