Seeking to build on its traditionally strong growth and profitability performance in the face of margin pressures and growth challenges in its fiercely competitive market segment, SPRichards hired The Progress Group to help it consider strategic alternatives in its distribution structure.
The company’s success had taken a toll on distribution cost and performance. Continuous facility expansions and upgrades had exhausted available capacities, and the company was continually leasing new space and taking on overflow facilities – and was projecting that it would have to continue to do so long-term.
The project’s challenges included:
- The need to compete on both price and service with a larger competitor operating out of a significantly more widespread facility network; and
- A strategic imperative to absorb a 25% SKU increase, concentrated in high-cube, high-value, high-volume products.
With The Progress Group’s help, the company analyzed the benefits of a network design solution that included a new Master Distribution Center structure to serve its more than three dozen existing DCs.
The Master DC design would allow the company to drive a significantly greater unit velocity through the existing DC network and to eliminate overflow facilities. Not only did the design provide a lower-cost operating solution, it would avoid the multi-million dollar capital expenditures that would have been needed to support the business in the old mode.
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