European Warehousing Consolidation Case Study

A major US athletic footwear manufacturer had consolidated their European operations and needed to consider what, if any, changes they needed to make to their warehousing and distribution arrangements to maximise the benefits from the re-structure.

·       A major issue was whether to consolidate some, or all, of the warehousing operations into a single operation and if so how best to do it.

·       The overall marketing strategy of EMEA was built around the objective of developing a high value brand. This needed to be supported by a high quality logistics service to the customers.

·       Market considerations in each country had to be reviewed as well as the cultural factors; e.g. the reaction of customers in France receiving shipments from a warehouse in another country. How would this effect the image of the French country operation?

·       The requirements in each territory differed; order to delivery cycle, average order sizes, special requirements all needed to be taken into account.

·       The feasibility of actually being able to deliver the required service and at what cost needed to be determined.

·       The effect of possible future consolidation of customers within Europe (driven by the single market) had to be assessed.

·       The potential implications of the adoption of the euro had to be considered.

In order to proceed the following process was adopted:

·       Analyse each individual countries’ current requirements and their peculiarities.

·       To look at the feasibility of the current operations to fulfil the requirements and the associated costs to deliver the service utilising the existing operations.

·       Identify potential warehousing contractors and get them to submit fully costed proposals for a phased implementation of a central European warehouse.

·       Attempt to identify haulage contractors who could deliver the required level of service throughout Europe. It was found that no single contractor was able to fulfil all of the requirements in every territory, so contractors were identified who could operate with individual countries or areas within Europe. They were invited to submit fully costed proposals to undertake the physical distribution operations.

·       By consultation with the Country Managers and the Commercial Director, attempt to project the requirements over a five year horizon.

·       Review physical operational requirements over a five-year time horizon, revert to the potential warehousing and distribution contractors and re-cost.

·       Select the warehousing contractor and the five distribution contractors.

·       Put together an implementation plan, which involved moving France, Benelux, UK and Germany into an existing facility, until a new build was completed.

·       Make recommendation and sell to the business.

·       Design the new warehouse in conjunction with the selected contractor and oversee the construction and fitting out.

·       Negotiate and agree contracts with the Warehousing Contractor.

·       Become a leader in the selection of systems to run the warehouse.

·       Execute the implementation plan, whilst planning the move from the start up warehouse to the new warehouse together with the migration of the remaining operations to the central warehouse.

The project was reviewed one year after implementation and was felt by all of the Country Managers to be a success.

Savings equated to £1 million in a full year.

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