So how many distribution centres do you have in your network and do you fully
understand the costs and service implications of having more or less
distribution centres we're going to be talking about that right now
okay so it's time for another discussion about distribution networks and this
time we're going to get into a little bit more detail and I thought we'd come
somewhere different we're here at Manly we tried filming
over on the other side of the surface a little bit noisy so we'll try it over
okay so in the previous video I mentioned that the location of your
warehouse is very much driven by the location of your customers and your
suppliers but actually your warehouse tends to get drawn towards the customers
being closer to customers reduces the delivery cost which is one of the main
costs in distribution but let's have a look at some of the other elements of
cost in your distribution network so here I've got a line haul cost now
depending where you are in the world you might call it line haul or trunking and
what I'm trying to show here on this graph in the sand is that the more
distribution centers you have in your network the higher that line haul or
trunking cost is going to be you're traveling actually more ten kilometers
does that make sense let's move on to another one
what about inventory and this is one that some people really don't fully
understand the more distribution centers you have in the network if we're going
along the the bottom access there the more distribution centres in the network
the more inventory we're carrying no it's not true that if you go from ten
distribution centers to one you're going to have ten percent of the inventory and
the reason is it's all to do with safety stock so the more warehouses in the
network the more overall inventory or have because you've got more safety
stock you've got safety stock in each warehouse what about the facility cost
obviously the more facilities that we've got we've got more buildings we've got
more overheads that cost is going to go up the more facilities we have in the
what about systems costs so all of the
systems and infrastructure that's going to go up for more warehouses we have in
Network Gee it's very distracting filming here just check out the view how cool is this
if you ever come to Manley I think that's where you can go and dive with
the sharks over there and just over here is the Manly ferry which goes across the
harbour into the city but let's get back to it systems costs so the systems costs
go up the more warehouses we have in our network there is one that comes down and
it's the delivery cost the cost of delivering to your customers locally
that one goes down because the more warehouses we have in the network we are
closer to our customers and therefore that overall cost will be lower and what
we're trying to do is to balance in every Network the total cost of the
distribution network and you're looking for that sweet spot so when you maybe
just got one or two distribution centers that cost quite high if you've got
twenty the cost is quite high we're looking for that bottom point in the
curve there what's the sort of optimum for your network and this is going to be
different for every business it's dependent on your customer service offer
it's dependent on the geography of the country that you're in so for your
business for your country you're looking for that sweet spot down the bottom
there and that's one of the things that we spent a lot of time on modeling in
logistics Bureau because it's quite a complex modeling exercise but I just
wanted to show you some of the things to think about
just these graphs here and I'll put a link below actually to an article and
probably a webinar waiting a lot more information on this okay so there's a
few things for you to think about when you're considering the number of
distribution centers in your network there's a lot of cost and service
implications remember there's a link below I'll put a blog post there more
comprehensive post I think we've got a webinar as well that you could log into
and don't forget if you found this useful do like do shared to hit that
subscribe button that way you get notified every time a new video pops up
on the channel thanks for joining us talk to you soon
I think we'll head off and see if we can find a really nice breakfast
somewhere in Manly bye for now