Network Planning

The Supply chain is an area of key strategic importance, so optimizing the Supply Chain Network should be a major initiative to any company. We can help make Supply chain improvements a reality.

At SWS, sales were booming so all of the Distribution Centers in Florida were either at or near capacity. News came that additional product lines would soon be acquired and the added business would require significant capital expenditures to handle the demand.

While planning a new conveyor system for the Tampa division at SWS, we determined that a single facility could ship 10,000 cases an hour, well over the prior output of 6,000 CPH. Managers often feel their facility is at or near capacity or overestimate the costs of increasing capacity, but outside assistance often shows this is not the case. The conveyor system was made up of 3 parts; pick lines (input), merge/sorters and loading lines (output), and all 3 needed to ship 10,000 cases per hour to meet capacity for the entire state. After developing the initial design, it became apparent that we could consolidate the Florida facilities from 5 into 2 (Pensacola remained separate due to its location on the panhandle). Over time, technology improved and a single sorter was able to do 10,000 cases per hour. The increased efficiency lengthened the time that a single sorter could provide sufficient capacity.

The next step was to develop the ROI analysis required to justify the capital investment. Would the savings from consolidating facilities offset the addition transportation costs? A Network analysis compared the current versus proposed costs for 7 key factors involved in the distribution process; Labor, Material handling, Systems, Facility, Inbound/Outbound Transportation and Taxes. Although spreadsheets can be used for this analysis, there are great tools such as Logic tools (now iLog) that can be used for this purpose.

The results of the Network analysis showed a substantial overall savings for the consolidated facility when compared to the costs of maintaining the status quo. Since it was a major decision for the company, there were numerous meetings with executives and local managers to discuss the costs, benefits and risks associated with the changes. The local teams were also brought in to verify the results and provide input. Based on these discussions, a large portion of the state would be consolidated into one facility in central Florida. The 650,000sf Lakeland Distribution center was brought online in 2006 and was capable of shipping 10,000 cases an hour, the highest throughput of any facility in the Wine & Spirits industry and serves as the flagship Distribution facility at SWS.

AJP Logistics

Supply Chain Engineering