Case Study: Determining
depot strategy for short lead time deliveries
A company delivering to the high street
from 14 depots nation-wide wished to review its depot network. They had
a large product range and the picking operation had to be very accurate.
Automation had been selectively introduced to facilitate low-cost
accurate order picking. The high investment cost of automation pointed
to fewer depots, but delivery lead times were very short so depots had
to be close to customers to achieve the service economically. For some
sparsely populated areas, volumes would not warrant highly automated
picking systems.
We conducted a number of studies, focussed on separate regions of the
UK. In those areas where high technology facilities had already been
introduced we confirmed the existing strategy and refined the serving
areas of the depots. In other areas, we established whether new
facilities were warranted and where they should be located.
A series of computer modelling techniques were employed. We used the
CAPS Logistics Supply Chain Designer to balance competing transport and
site costs to find the best combination. Paragon was used to size the
vehicle fleet. Spreadsheets and mapping software were also used.
In one area, a planned depot closure was averted due to adverse impact
on service. In another, two old fashioned depots are being closed and a
new high technology facility is under construction. After the strategic
work was completed, we carried out an account profitability study, which
enabled the company to understand the contribution being made to its
business by different types of customer.
