A well planned and organized distribution network is absolutely vital if you want to get products from manufacturer to end customer in the most efficient and effective way. Of course, unless you are part of a new company, starting afresh with endless options, your supply chain operation already has what it has in terms of a distribution network—but is it the right network for the way your business operates?
Distribution Network Needs Change Over Time
There are a number of negative consequences which arise from a poor distribution network design, most of them relating to cost and customer service. In many cases, the problem is not that the network was designed poorly in the first place, but rather that over time, some of the following situations may have developed:
- Customer needs have changed
- The scale of the business has increased or decreased
- Other external forces acting on the network have changed
Consequences of Poor Network Design
Because distribution dynamics change over time, it’s important to review your company’s distribution network every few years. Ask yourself if it’s still providing the most efficient and effective way of getting products to your customers.
A review is particularly important if you’re observing the following symptoms of inefficiency. They are quite possibly the consequences of a distribution network design that no longer meets the needs of your customers or your operation:
- Customers are expressing dissatisfaction with delivery lead times
- You frequently have to make “rush deliveries” to appease customers
- You have too much inventory in your network and find it hard to reduce
- Your products are touched multiple times in their journey through your distribution network
- Your distribution costs are inordinately high
- Your distribution centres are under or over-utilised
As you can probably surmise, all these consequences of poor distribution network design translate into higher costs or less than impressive customer service. If your organisation is suffering from any of these symptoms, it may be time to review your network. If you find a redesign is necessary, remember to consider how you can increase flexibility to avoid future design obsolescence.
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