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Adding an extra distribution centre after centre of gravity analysis

Network redesign and optimisation resulted in an estimated $289K savings in supply chain costs and service level improvements

Needing a cost-efficient supply chain network

The customer was looking to design the most cost-efficient network to serve US demand.

Proposal

  • DSV conducted a Centre of Gravity analysis to identify potential locations for distribution centres (DCs)
  • DSV determined optimal network setup (1 DC vs 2 DC) based on both cost and service level impacts.

Benefits for the customer

  • The setup with 2 DCs gave estimated cost savings of US$289K p.a. (7% of the baseline).
  • This setup also provided service level improvements: 2-day customer coverage increased by 15% and 3-day customer coverage increased by 11%.
 
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