Is your distribution network structure
appropriate for your business? And by that, I
mean the network of warehouses and
distribution centers.
Hi, this is Rob O'Byrne from Logistics Bureau.
And we're out in the country here today and I've got a
very dry throat, excuse me,
and I'm going to share
some tips with you on things to look for
in your own distribution network to make
sure it's efficient and you're not
paying too much for your outbound supply chain.
So, where are we?
We're between Melbourne and Sydney on the Hume
Highway. We've been out in the country
New South Wales, visiting some customers,
and I thought it was appropriate to talk
about distribution networks because
we've got loads and loads of trucks
thundering up and down the highway here,
most of these are going to be
running between distribution centers in
Melbourne and Sydney. Excuse me, slurping on
this all the time, but it's 40 degrees
here and it's a bit dry on the throat.
Now, if we've got any safety officers
watching, we are doing this video very
safely. We are well back from the highway
The car's pulled into a lay-by, we're
filming from behind the safety barrier,
so no safety comments please below
the video.
Okay, distribution networks, so we've got an
800 k highway here with product moving
to and from Melbourne and Sydney, same
deal going up and down to Brisbane from
from beyond there, up to Rockhampton,
across to Adelaid, cross to Perth, we move
product vast distances in Australia.
I mean our continent is about the size of
the U.S., if you're watching this
from a different country. So why is the
distribution network really important?
Because running these trucks up and
down the highways is darn expensive. We're
moving product, you know thousands of
kilometers at great expense to get
closer to the customer, so one of the
things that we can do by ensuring that
our distribution network is appropriate
is to cut down the cost of all of these
trucks. Now if you're watching this from
outside Australia, I've just asked Pat
whose behind the camera to give me a
thumbs up if she sees a B-Double coming.
For those in Australia you know all about these,
but for people in other countries, a
B-Double is a tractor-trailer unit that
has two trailers and it makes it really
efficient on these long runs because you
can carry out, I think they have something
like a 64 tonne payload, so it can carry a lot of
product, so very efficient, and if we see one
coming, we'll point it out. So, what drives the
shape of your distribution network?
A lot of people who don't understand this,
I'll use Australia as an example because
that's where we are. They think "We
got to have a warehouse in Melbourne and
Sydney and Brisbane and Rockhampton and
Perth and Adelaide, well you don't, necessarily. It's all
driven by your customer service offer.
Just think about that for a moment, the
only reason you've got product in all
those areas is because you need it close
to your customer. What's the customer
service offers that you're offering to
the marketplace? If it's, you know, order
now and get it within four hours,
yeah, you need all those distribution
centers, you've got to have your stock close
to the customer. If it's order today and
we'll get it to you tomorrow,
well guess what? You can service most of
the east coast of Australia out of Sydney.
If your customers are wanting a 2-day
delivery cycle, you know, there you're
starting almost into the realms of one
DC for the country. Perth's always a
problem, of course, but think about
that if you're in Australia or if you're in other
countries, the key driver of the shape of
your distribution network, the number of
distribution centers in the network is
the customer service offer that you're
offering the market.
You may have opportunities to ease
that back a little bit and reduce the
number of distribution centers. On the
flipside, your inbound supply also is a
fairly critical component of that, it
doesn't have as much impact. Pat's just saying
there's a B-Double going past on the
other side, it doesn't have as much impact
as customer service, but almost think of
supply service.
It's the same sort of principle, how
quickly can we get product into our
distribution centers, that can determine on
the inbound side where those distribution centers
that are going to go, but primarily,
primarily driven, there's another B-Double,
B-Double, a good advert for Linfox delivering to Coles,
primarily driven by your customer
service offer, and if you can ease that
back, you'll have less distribution
centres, less inventory in your network, so
think about your own distribution
network. If you've got too many warehouses,
what's driving that is that the customer
service offer and can you reduce the
amount of product that's thundering up and
down these highways and costing you a lot
of money.