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Distribution Network Design Considerations for the SMB Market

September 8, 2020
5 min read
Transportation Logistics
Transportation Management
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Eventually, small and medium-sized companies will grow to a point where it makes sense to look at their distribution network design and how well it’s optimized. When it comes time to look at how your organization’s distribution network is performing, consider the points below to ensure you’re focused on the right elements.

Two Main Factors

When it comes to distribution network design, a clear performance picture considers two main factors:

  1. Meeting customer needs
  2. Evaluating the cost of meeting them

That said, positive customer experience requires a distribution network with a combination of criteria, including:

  • Timely communication
  • Fast and easy access to available products
  • Transparency and ease of order tracking through the delivery process
  • The option and ability to return products

Location Matters

Centralized facilities can work well if you already have satisfied customers, but as businesses grow, so will demand. When this happens, we all too often see supply chain managers rush to add warehousing space in multiple locations throughout their footprint. While great in theory, and a fine solution to increased demand, they quickly realize that the cost of rushing to meet demand comes at the cost of reduced profit margin. Altering a distribution network, e.g., adding additional facilities to the supply chain, means higher costs for everything from inventory to transportation and beyond.

On paper, outbound transportation costs decrease when more facilities­ are added as fewer miles are being traveled to deliver from the warehouses. The inbound costs, however, often increase as there are more facilities to maintain. Finding the right balance between logistics costs and the number of facilities can be tricky, especially for smaller companies experiencing these growing pains for the first time. We’ve come to the rescue of more than a few businesses in this predicament.

As a full-service 3PL, Amware has helped growing businesses by looking at their supply chain and existing distribution network from top to bottom. In most cases, we’ve been able to help them continue their growth and maintain their profit.

What most people don’t realize is that Cleveland, OH is a logistics oasis. We’re withing a day (drive) to over 80% of the United States. Rather than utilizing and maintaining several public warehouses across the country, many growing businesses have, instead, utilized Amware’s warehouses here in Cleveland. By doing so, they have been able to better manage inventory and more easily forecast inbound LTL and FTL freight transportation costs. Depending on the product, some have also consolidated outbound freight to other, smaller distribution centers and warehouses.

Contact us today to learn more about distribution network design and how Amware can help your business grow without suffering the pain other growing companies have felt. If you’d like to learn more about public warehousing, click below to download our free guide on “The Hidden Costs of Warehousing.”

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