Why You Should Review Your Distribution Network?

Summary

This video discusses the importance of regularly reviewing distribution networks for businesses. It highlights five key reasons to reassess them, including mergers and acquisitions, expanding product and customer portfolios, the rise of omnichannel distribution, evolving service offers, and changing costs in freight and warehousing. The speaker emphasizes the need for constant evaluation and adaptation to maintain efficiency and stay competitive in a dynamic market.

Takeaways

• 🔍 Regularly Review Distribution Networks: It's important to revisit your distribution network every five years or so to ensure it remains efficient and effective.
• 💼 Impact of Mergers and Acquisitions: M&A activities can create a need to reassess and optimize the combined distribution networks for better synergies and efficiency.
• 📈 Product and Customer Expansion: An expanding product range and customer base can strain the existing distribution network, leading to inefficiencies and increased costs.
• 🛍️ Omni-Channel Challenges: The shift to multi-channel distribution requires a hybrid network approach, as traditional distribution setups may not be suitable for new channels like online B2C orders.
• 🏠 New Service Offers: Changes in service offerings, such as an increase in home deliveries, can significantly affect the distribution network's performance and necessitate a review.
• 📊 Cost Variability: Fluctuations in freight, warehousing, and ocean freight costs can have a substantial impact on distribution networks, requiring constant monitoring and adjustments.
• 🚚 Disruptions in Freight: External factors like natural disasters can disrupt freight operations, highlighting the need for a robust and flexible distribution network.
• 🛑 Warehousing Considerations: Companies are reevaluating their warehousing strategies to accommodate needs for more space and efficiency, which is a critical part of the distribution network.
• 🔄 Constant Change and Innovation: Distribution networks require ongoing review and innovation to keep up with market changes and maintain a competitive edge.
• 📈 Benchmarking and Health Checks: Regular benchmarking and health checks can help assess the performance of the distribution network and identify areas for improvement.

Q & A

Why does the speaker enjoy examining distribution networks?

The speaker enjoys examining distribution networks because of the engineering and analytical components involved, as well as the potential for significant improvements and benefits that can be achieved through tweaking and optimizing these networks.

How often should a company review its distribution network according to the speaker?

The speaker suggests that a company should review its distribution network every five years or so to ensure it remains efficient and effective.

What is one of the triggers for a company to undertake a network study as mentioned in the script?

One of the triggers for a company to undertake a network study is during merger and acquisition activity, where the goal is to find synergies and improve the combined network's efficiency.

What impact does an expanding product portfolio and customer range have on a distribution network?

An expanding product portfolio and customer range can lead to inefficiencies in a distribution network, such as facilities being squeezed for space and transport networks not operating as efficiently, resulting in increased costs and declining service levels.

Why has the shift to omnichannel distribution been challenging for some organizations?

The shift to omnichannel distribution has been challenging because it requires a hybrid distribution network that can cater to multiple channels, which is not always easy to implement, especially when trying to fulfill online B2C orders from bulk warehouses.

What is the significance of new service offers on a distribution network?

New service offers, especially those involving more frequent and smaller orders like home deliveries, can significantly impact a distribution network, necessitating a review and potential adjustments to ensure it remains fit for purpose.

Why is it important to constantly review the performance of a distribution network?

It is important to constantly review the performance of a distribution network to keep up with competitors, adapt to changes in costs, and ensure the network remains effective and efficient in the face of evolving business needs.

What are some of the cost changes that can impact a distribution network?

Cost changes that can impact a distribution network include fluctuations in freight costs, disruptions in road or air freight due to external factors like natural disasters, and changes in warehousing needs or ocean freight costs.

How have recent disruptions in road freight in Australia affected distribution networks?

Recent disruptions in road freight in Australia, such as those caused by floods, have forced companies to reroute and extend supply chains, sometimes by significant distances, to reach their destinations, impacting the efficiency of their distribution networks.

What is the speaker's advice for medium-sized organizations regarding their distribution networks?

The speaker advises medium-sized organizations to not view the review of their distribution networks as too difficult. Instead, they should look forward with their business plans and consider how their distribution networks may need to change to support future business needs.

What are the five main reasons the speaker suggests for reviewing a distribution network?

The five main reasons are: merger and acquisition activity, new products and customers, new channels to market, new service offers, and changes to costs.