Supply Chain Network Optimization for a North American Produce Grower

$44M

Projected 5 Years Savings

11%

Projected Reduction in Annual Spend

Context

Navigating Growth and Complexity in a Fresh Produce Supply Chain

Our client, a leading greenhouse produce grower and distributor, was facing significant challenges due to rapid growth, both organic and through acquisitions. Their existing supply chain network and distribution infrastructure was nearing its capacity limits. This, combined with rising transportation and logistics costs and the need to integrate newly acquired operations, created an urgent need for a comprehensive supply chain network optimization and distribution network design review.

They engaged us to optimize their current distribution network and to develop a “Greenfield” network design from the ground up. The primary goals were to reduce supply chain costs, improve service levels, and enhance delivery performance, while maintaining their commitment to delivering fresh produce to over 250 distribution centers within a tight 24–48 hour window.

What We Discovered

Uncovering Inefficiencies and Opportunities in a High-Velocity Network

Our deep dive into the client’s operations revealed several critical areas for improvement. While the core network was fundamentally sound, its reactive evolution had led to fragmentation and inefficiencies that posed a risk to future growth and profitability.

Imminent Capacity Risks: Key distribution centers were projected to be over capacity for 18 to 34 weeks annually by 2027, posing a significant threat to customer service and scalability.
Inefficient DC Utilization: Existing facilities could be right-sized for growth creating an opportunity to reduce total facility square footage by 10-25% while supporting increased demand.
Unnecessary Transfer Freight: A staggering 45% of DC-to-DC transfers, amounting to approximately 40,000 pallets annually, were not driven by primary supply and demand, highlighting a major opportunity for improvement in demand planning and inventory optimization.
Fragmented Transportation Strategy: Analysis of 27 carriers across 33 customer clusters showed inconsistent rates and weak carrier alignments, indicating strong opportunities for transportation optimization and strategic sourcing, particularly in high-growth regions.
Reactive Operational Model: The operational model was highly reactive to customer demands, resulting in higher operating costs, operational inefficiencies, and inconsistencies that undermined service quality and speed.

Our Approach

A Data-Driven Approach to Modeling a Future-State Supply Chain

Over a ten-week engagement, our team partnered with the client to build a comprehensive, dynamic model of their entire supply chain. We moved beyond static analysis to create flexible models that enabled robust scenario planning and network optimization modeling.

Comprehensive Scenario Modeling: We formulated and assessed 16 distinct scenarios including both current network optimization and Greenfield network design, evaluated across cost, service level, and risk over a five-year horizon.
Multi-Faceted Analysis: Our evaluation integrated three core models: a Transportation & Routing Model using centroid analysis to find ideal DC locations; a Facility Capacity Model to calculate right-sized requirements for storage, staging, and repack operations; and a detailed Financial Model to project costs including Freight, DC OpEx, and CapEx.
Customer & Carrier Profiling: We grouped customer demand into 6 distinct regional clusters and evaluated carrier saturation across every lane. This provided a clear map of volume, routing demands, and cost-saving opportunities to inform strategy.
Collaborative Validation: We held weekly steering committee meetings to review methodologies, assumptions, and outputs. Analysis was packaged into digestible “Chapters” to facilitate understanding and foster a sense of ownership and ensure stakeholder alignment.

Value Created

Delivering a Clear Roadmap to a More Efficient and Resilient Network

Our analysis provided the client with a data-driven, strategic roadmap, confirming some of their internal hypotheses while quantifying the significant financial and operational benefits of a redesigned network. The study delivered a clear, optimal path forward to support continued growth and maintain a competitive edge.

Substantial Cost Savings: The recommended Greenfield scenario is projected to yield an 11% reduction in annual spend, totaling $44.3M in net savings over five years compared to the baseline of simply expanding existing facilities.
Strong Financial Returns: This scenario also projected a rapid payback period of 1.9 years, an Internal Rate of Return (IRR) of 110%, and a Cash Yield of 48%, presenting a compelling business case for investment.
Optimized Facility Footprint: The new network design enables more efficient space utilization, projecting a reduction in total facility square footage by 10-25% while still accommodating future growth.
Strategic Transportation Insights: We identified key lanes for freight cost reduction and carrier optimization across high-growth regions with significant potential for savings and improved carrier partnerships.
Actionable Improvement Plan: Beyond the network design, we defined priority solutions to improve inventory flow and distribution efficiency, with the potential to reduce up to 45% of DC-to-DC transfers, representing approximately 40,000 pallets per year.

Evidence of Outcomes

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