Rapidly growing online retailer – supply chain strategy and operating model
A rapidly growing online retailer, with multiple warehouse locations initially set up to suit the original smaller-scale business model, required assistance to optimise service, drive cost savings and plan for growth.
The Background
The business had developed significantly in terms of the product range offered, overall revenue turnover and the associated cost base. To support the growth and expanding cost base, the business needed to evaluate the current operating model and determine options that would optimise the supply chain to:
cost-effectively manage and enable future growth
ensure the requirements of customer demand were achieved.
How the Siecap team helped
Siecap was engaged to determine the supply chain model that would provide the optimal cost and service solution for the business to serve current and future strategic needs for both Australia and New Zealand.
Key questions included:
How many facility options are required, how big should they be, and what design options are available to optimise site efficiency?
Should the business run the facility themselves or outsource?
What does the overall change plan look like and what are the costs and benefits?
What growth targets will see additional network-change considerations?
The Results
The business was assessed to determine optimal supply chain operations to service current and future state service demand. The assessment considered the key pillars of:
customer service demands
operational requirements
financial/economic cost inputs.
To support the recommendations, an economic model was developed to address the impact of drivers based on:
capital and operating costs of alternatives
in-house and outsourced operating models
staffing location, redundancy issues and options
growth and future product mix projections
financial cost drivers and service needs
inbound volumes and sourcing locations
inventory on hand, stock turns and product/storage group requirements
outbound volumes, locations, transport modes and service levels.
The result was a recommendation for what was deemed the most efficient and cost-effective option to support the growth of the business.
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