The 4 Best Practices in Designing a Perfect Global Distribution Center
This best practice is called “implementing global design in the distribution center”. Let us say when you go to Walmart in Atlanta it looks one way and then let’s say you go to Walmart in Cincinnati, Ohio it looks completely different.
It will be difficult fit for you to navigate to get even a simple cough syrup that you want to pick up. It will be much easier by the fact that if all the Walmart’s look alike and as soon as you enter and by going to the left you can find the pharmacy isles and you can get whatever you want.
Taking this concept and applying it in your network of distribution centers, which is a big supply chain network will be helpful. Typically you are a retailer that moves the product merchandise all over the US. There is typically one in the east coast and one in the west coast or one in the Texas or Midwest and one in the Mid-Tex.
Following this approach you can make all your distribution centers look similar or even from a configuration perspective and from a systems operations perspective you can set it up to have the same configuration. If you make it look very similar, then you can also implement similar processes between DC1 and DC2, DC2 and DC3.
If all of them are uniform then everything is easy to manage. There are two approaches namely localized approach and centralized approach.
- In the localized approach the local teams operate in a decentralized fashion, which means that the local teams pretty much has the freedom to do whatever they want to do.
- In the centralized approach there will be professionals that come from corporate. There will be a supply chain crew from the corporate and they will institute a uniform structure across all the distribution centers (DC’s). They would go and roll out one by one, people from one facility would come and help with the other facility. As they were part of the previous implementation which will help them to leverage a lot of those resources.
- Another thing that you could aspire to is, you can make any facility handle any SKU so that becomes a much more flexible model. Depending on the location of the customer, you can move your product through any facility by any way possible, which gives you a lot of flexibility.
- The next thing is you can optimize the processes across your supply chain network i.e. across the different facilities without having to reinvent the process again from one facility to another.
Implementing the same set of processes across all the facilities is easier with the different systemic elements and systemic entities having similar nomenclature for the locations such as reserve locations, active locations, staging locations and drop locations. That just makes the process more efficient to handle across the entire supply chain.
Hopefully this is helpful and please share your thoughts and comments below.