Blue Sky National Network for Regional Supplier

The purpose of this case study is to illustrate the following:

1. Blue sky distribution network development.
2. The universality of our modelling tool:
   
   1. Delivery units included pallets, oversized pallets, stillages and nested or stacked products, all converted into standard pallet footprint equivalents.
   2. Some products or customers required vehicles with mechanical offloading capability; others could be served with conventional flat beds.
   3. Vehicle overloading was a risk, so order weight was also used as a constraint

Background

This is a study for a regional supplier of construction materials operating from a single yard south of London that wished to establish a presence in the rest of the country.

The purpose of the study was to plot a road map that would allow the company’s growth into the remaining areas of the country where it had no presence using regional yards and its own fleet.

The Base Case

• The blue columns show the populations of postcode districts the company delivered into for the period modelled illustrating the business’s current delivery territory excluding distant outsourced deliveries.
• The columns’ height represents their percentage or share of the total population.
• 2,700 postcode districts are represented.

The First Stage

• The natural first stage is a Birmingham depot.
• 80% of the population can be reached within 3 hours’ drive from one depot or the other.
• The grey columns are regions beyond three hour’s drive from either depot.
• Each postcode district is attached to its nearest depot.
• Birmingham could reduce the load on the existing site as shown in the bar chart.

The Second Stage

• The natural second stage is a Leeds depot to be able to reach the North-East and reduce delivery resources and costs.
• 84% of the population can be reached within 3 hours’ drive from one depot or another.
• Delivery costs would decrease for the North.
• Similar volume is likely to be delivered from each depot to its area. 
• The grey columns are regions beyond three hour’s drive from any depot

The Final Stage

• Adding Motherwell in Scotland will allow access to the final 8% of the population reachable within three hours’ drive.
  
• It would be the smallest site.
  
• The total population reachable would be 96%.
  
• Suppliers will charge a premium to deliver stock to Scotland.
  

The Recommendation

• The recommendation was for a three site solution.  It would not be the cheapest from the transport point of view but:
• It would reach the bulk of the population of England and Wales and nearly the same as a four or five site solution (see bar chart above).
• It would benefit from the economies of scale from having three similarly sized sites.
• It would be less complex.
• It would be likely to be the cheapest network overall.
• It could be supplemented by Scotland eventually to reach 92% of the population.

Conclusion