Fast Moving Consumer Goods : Distribution master plan

Definition of a target distribution master plan to support the development of high added value activities in Asia/Pacific countries
Case study
07/21/2015

Context and challenges 

Faced with complex markets (low volumes, high growth and strict regulations) and an unsuitable supply chain (insufficient service rate, long supply leadtimes, poor control of end of life), this industry leader decided to launch a project to overhaul its distribution master plan of a complete product range, together with its supplier.

Our customer called on Argon Consulting for help in assessing its current practices, defining the target distribution master plan and identifying the best implementation conditions. 

Approach and methodology

The initial review of the existing situation (expectations of internal and external customers, performance analysis, diagnostic of strengths and weaknesses, benchmark of the organization and supply chain practices) provided the customer with a clear vision of the maturity and the performance of its supply chain activities and highlighted the paths of improvement to be investigated by the project.

In the second phase, the project team mapped out all the possible change scenarios of the distribution patter. An analytical model was built to assess the impact of each of these scenarios on performance. The impacts in terms of service (leadtimes, risks, complexity), stocks (stock levels, risk of obsolescence), transport (cost, impact on customs) and logistics (warehousing surface area, handling) allowed us to select the realistic scenarios capable of significantly improving the performance of this supply chain.

The results of these scenarios were then submitted to a multi-disciplinary team, made up of our customer and their supplier. The fiscal impacts (geographical location of the margin on sale prices) were also analyzed in greater depth. A short list of operational scenarios was drawn up and a proposal was then submitted to the management committee. 

Results

  • The initiative identified a target master plan that cut global distribution costs by 25%, while guaranteeing the service rate for the markets.
  • The use of a factual, analytical approach allowed us to bring together our customer and their supplier on a shared vision of the target master plan. The model was used to precisely assess the economic impacts for each party. In this way, we were able to define the rules to be applied in order to share the identified savings.
  • Four close-fitting initiatives for the overhaul of the distribution master plan were identified and were used to identify the areas of collaboration between the customer and its supplier in the years to come.