Higher capacity utilization reduces distribution costs per unit shipped.
As compared to similar distribution companies operating in the country, their direct distribution cost is relatively high.
Currently, 550 direct delivery distribution trucks operate nationwide from 28 distribution centers.
Distribution management
Every local market is unique, which drives the need to design various delivery service systems to maximize service levels at the lowest possible cost. The higher the capacity utilization of distribution assets and resources, the lower the distribution cost per unit delivered.
Thus, at the time a truck is purchased, a company is affected by the fixed cost. It does not matter if the company utilizes the truck or not; the standing cost is set in motion anyway. Distribution management starts with the understanding that when a company operates a delivery truck, its distribution system incurs massive costs. Every truck needs a driver, and when adding an additional truck must be considered a long-term financial investment. This theoretically points out that when operating with a private fleet, most of the delivery cost is fixed, and it does not matter if the company uses the trucks or not. Therefore, the most significant cost savings in distribution are achieved when eliminating the need for a truck and a driver.
A master plan guided the process
Assess the current situation and introduce effective and efficient change programs that reduce distribution costs and increase services for the company.
Core Modules and Content:
- Delivery system economics
- Point of purchase sales and marketing strategy
- Infrastructure planning
- Distribution fundamentals
- Capacity utilization plan to improve distribution cost
- Measure and monitor key performances.
Huge success lowering cost
The company reduced distribution costs by 18% in the first year through planning and understanding. Over the following years, it further reduced costs and increased efficiencies through continuous improvement programs.
We also presented a customized “Distribution Management” training program for Distribution Managers that was well received as an excellent learning experience.