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$4.3M in Benefits Identified by Automotive Parts Distribution Centre through Warehouse Assessment

$4.3M in Benefits Identified by Automotive Parts Distribution Centre through Warehouse Assessment

As a manufacturer of custom closets and storage for homes, this company provides its products through its franchising business systems, as well as corporate owned business units. 

$58M
annual revenue unlocked from warehousing capacity
75%
reduction in receiving lead time

Challenge

The client had enjoyed strong and steady growth for more than 3 consecutive years having expanded their geography, customer base, and product offerings. The back-end of the business had not been scaled appropriately to match this spike in incoming demand for product, and coupled with volatility with vendors, created bottlenecks in inbound and outbound warehousing. 

Discovery

The team worked closely with the client to determine their growth ambitions as well as understand what their current day-to-day challenges were. Utilizing information gained from on-site experience in addition to data uncovered from their ERP system and industry benchmarks, the evaluation phase uncovered several performance improvement opportunities geared towards level-loading the business in the short term and creating sustainable scalability in the long-term:

  • Increase pallet capacity and shorten walking paths by redesigning warehousing facilities
  • Mitigate the shipping & receiving backlog by standardizing and automating the process

  • Increase workstation productivity by implementing a visual management system 

To capitalize on these opportunities, we tested, piloted, and implemented these solutions at 9 distribution centers across the US.

Value Created

As result of this initiative, this client enjoyed both immediate and long-term financial and strategic benefits:

  • Annual incremental revenue increase of $58M enabled by capacity to store additional materials

  • Cost avoidance of leasing new facilities estimated $3M per annum

  • Receiving lead time was reduced by 75%, from 4.8 to 1.2 days as result of process automation and standardization, unlocking early payment terms with several key vendors

Figure 1

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