8 Distribution Network Business Case Questions
to Ask

With changing market demands, disruptions and labor shortages, being a supply chain leader can come with new challenges for current and future operations. Multiple supply chain reports and surveys indicate that e-Commerce will continue its double-digit, year-over-year growth and that customer demands and delivery expectations will not return to pre-pandemic levels. With rising demand and service expectations, distribution networks can no longer be viewed as a cost of doing business; they must transform into an organization’s competitive advantage.

Asking and examining the right questions while building a distribution network business case can assist an organization in revealing obstacles and opportunities, as well as costs and benefits. In this FORTNA Insight, we will review the eight questions to ask when building a business case for a new or expanded distribution network.

Where to build an optimized distribution network?

Using the channel service requirements, the organization must decide where the optimum distribution centers (DCs) would be located, how many locations are needed in the network and the types of facilities. Some network considerations can include the following:

• Brownfield vs. Greenfield
• Buy vs. lease
• In-house distribution vs. 3PL
• Environmental and hazardous material needs

Economic development opportunities, labor availability and customer clusters are other considerations for building a financially justified and data-backed plan. Partnering with a supply chain organization with experience in building complex networks that not only meet an operation’s service requirements but also have the built-in flexibility to respond to future disruptions is vital.

When scoping a network location strategy, consider the following:

• M&A activities, growth projections and the cost of doing nothing
• Current and proposed network geographies, channels and available transportation modes
• Future state requirements and regulations
• Modeling multiple network scenarios using data, timeframe and known obstacles
• Available and needed resources

How to measure expectations and performance from each warehouse?

Warehouse management is where many operations can be seen as successes or failures. Warehouses have varying needs and modes of operations; however, most mid- to large-sized DCs will need to monitor and integrate the following:

• An enterprise resource planning (ERP) system that can seamlessly integrate into a warehouse management system (WMS) or warehouse execution system (WES). These two software programs must work seamlessly to provide real-time data and visibility across the entire network while managing day-to-day operations.
• Labor management – Shortages in general and skilled labor in particular will continue to challenge organizations, and creating a strategy to address labor acquisition and retention is crucial. Leveraging automation and implementing optimized processes and practices can reduce an operation’s need for labor while helping retain its current workforce.
• Capacity utilization – By analyzing the data across a distribution network, an organization can reveal lost and underutilized capacity and make corrective adjustments.

How to best support organizational and change management?

Organizational infrastructure and change management can be just as important to the success of any project. Securing executive leadership support and communicating with the organization can produce positive and substantial results. Change is always challenging, especially if the new processes are based on unfamiliar technology and a new way of doing tasks that have historically been done differently. Recognizing and planning for education and training and anticipating resistance can make the transition easier.

What is the necessary enabling technology needed for execution and visibility?

Real-time data and operational network visibility have been a goal of most organizations as they collect business intelligence from the business side and warehouse floor to make adjustments and decisions. Building a design that utilizes technology to provide easily interpreted dashboards and data that can simplify and support decisions can make communicating across the network easier.

Not all technology will come from one source; engaging with a supply chain partner who can build the right operational design for your network is important. Understanding an operation’s labor optimization, inventory and capacity needs, and throughput demands can drive the appropriate technology needed. A unique data-driven approach can lead to a solution that drives growth, flexibility and profitability.

FORTNA Can Help

When supply chain disruption is the norm and customer demands are multiplying by the minute, you need a partner to deliver cutting-edge technology and innovative thinking to predict your needs before they become issues. FORTNA leverages automation, software and robotics to enable companies to outpace the demands of tomorrow. We are an end-to-end design-build firm, designing and delivering data-driven solutions to ensure process improvements, growth and, ultimately, profitability.

Want to discuss your distribution network? Contact FORTNA today.

Published/Updated 4/27/23