This presentation will provide you an insight into logistics / distribution issues that you may come across during a consulting project. The presentation is designed for people who want to become management consultants, business analysts or have to run and optimize supply chain on daily bases. In the presentation you will learn 5 things: 1. What is the goal of Distribution / Logistics system 2. What are the basic laws of distribution 3. What different types of distribution you can use and what are their pros and cons 4. Where you can find savings in Distribution / Logistics 5. What are the typical problems in Distribution / Logistics. The presentation is based on my 14 years of experience as a consultant in top consulting companies and as a Board Member responsible for strategy, improvement and turn-arounds in biggest companies from Retail, FMCG, SMG, B2B sector that I worked for. On many occasions I had to optimize the whole supply chain side of the businesses I was responsible for. On the basis of what you will find in this course I have trained over 100 consultants, business analysts and managers who now are Supply Chain Directors, Operational Directors, COO, Investment Directors

1. 1
Distribution / Logistics for
Management Consultants
Main things you should know to participate in a consulting project

2. 2
Supply chain is extremely complex, especially in the era of
multichannel and globalization. Therefore, you have to become
very analytical and innovative to find savings and improvements

3. 3
It consists of 5 that supply chain consist of
Distribution /
Logistics
Procurement /
Purchasing
Production Planning
Sales Forecasting Customer service

4. 4
In this presentation I will talk about Distribution / Logistics
Distribution /
Logistics
Procurement /
Purchasing
Production Planning
Sales Forecasting Customer service

5. 5
Thanks to this presentation you will
learn main issues in Distribution /
Logistics that may occur during a
consulting project

6. 6
Introduction to Distribution
Model

7. 7
Distribution is the physical part of the supply chain. Its
aim is to get the right products to the factory or
customers on time, unharmed, fast while keeping as little
inventory as possible

8. 8
I will discuss 5 subject
Goals of Distribution
Model
Basic laws of
distribution
Where you can find
savings in
distribution
Typical problems in
Distribution
Different types of
distribution

9. 9
This presentation is a part of my online course devoted to Supply
Chain. For more check the link with discount below. You will find
there a lot of cases with calculations in Excel provided.
Click to check my course
Supply Chain for Management
Consultants
$190
$15

10. 10
Goals of Distribution Model

11. 11
The primary goals of distribution are cost minimization and
proper execution of orders
Costs
minimization
% of order
execution
Cost related to
the inventory
▪ Cost of warehousing
▪ Cost of frozen capital
▪ Cost of lost sales
▪ On Time
▪ In Full
▪ Free of Error
▪ Minimize the cost per
unit of transportation

12. 12
For transportation we have simple goals that can be
measured using the OT-IF-EF framework
IFOT% order execution EF
90%90%72,9% 90%
▪ Delivered on time ▪ In Full – meaning
the exact number
as it was supposed
to be delivered
▪ Error Free –
exactly what was
asked for with all
accompanying
documents

13. 13
You would also look at the cost per unit. I recommend
decomposing it so you can say more about the drivers of this
cost
COST
TONNE
= COST
km or miles
LOAD
x x
TONNE
km or miles
LOAD
▪ Here you want
to minimize the
cost of 1 km
▪ Here you want
to minimize the
number of km
that a single
shipment (load)
has to go
through
▪ Here you want
to increase the
usage of the
shipment (load)
– have more
tons there

14. 14
Basic laws of distribution

15. 15
There are 4 basic laws that we can observe in Logistics
Inventory
Costs
Transpor-
tation Cost
Facility Costs
Response time
Total
Logistics Cost
Number
of Facilities
Number
of Facilities
Number
of Facilities
Number
of Facilities
Relationship between Number of Facilities
and Facility Costs
Variation in Logistics Cost and Response Time
with Number of Facilities
Relationship between Number of Facilities
and Inventory Costs
Relationship between Number of Facilities
and Transportation Costs

16. 16
Different types of distribution

17. 17
Let’s have a look at the 2 examples of direct shipping
Suppliers Retail Stores
Direct shipping
Suppliers Retail Stores
Direct shipping with milk run

18. 18
DC
Suppliers Retail Stores
All shipment via DC
Suppliers Retail Stores
DC
Milk runs from DC
Let’s have a look at 2 examples shipment via DC

19. 19
There is no ideal distribution scheme. Each and every has its
pros and cons
Pros
▪ No intermediate warehouse
▪ Simple to coordinate
Cons
▪ Lower transportation costs for small lots
▪ Lower inventories
▪ Lower inbound transportation cost
through consolidation
▪ Lower outbound transportation cost for
small lots
▪ Very low inventory requirement
▪ Lower transportation cost through
consolidation
Direct shipping
Direct shipping with milk
runs
All shipments via central DC
with inventory storage
All shipments via central DC
with cross-dock
Shipping via DC using milk
runs
Tailored network
▪ Transportation choice best matches
needs of individual product and store
▪ High inventories (due to large lot size)
▪ Significant receiving expense
▪ Increased coordination complexity
▪ Increased inventory cost
▪ Increased handling at DC
▪ Further increase in coordination
complexity
▪ Increased coordination complexity
▪ Highest coordination complexity

20. 20
Where you can find savings in
distribution

21. 21
In distribution there are number of standard places where you can
find savings
Warehousing
Distribution
Logistics
Cost per kilometer
Truck utilization
Frozen capital
Warehousing space
Number of kilometers
Waste in transport
Waste in warehousing
Allocation of equipment
Stock outs
▪ Consolidate transportation contracts and negotiate prices
▪ Change trucks
▪ Reduce fuel consumption
▪ Check of real km with the planned ones
▪ Move orders to another distribution center/plant
▪ Change routing
▪ Sell return trips
▪ Consolidate transports to the same direction / region
▪ Introduce second level in trucks
▪ Improve of pallets controls
▪ Improve the control of expiry date
▪ Introduce FIFO
▪ Improve security checks
▪ Reallocate resources to other locations
▪ Centralize warehouses
▪ Negotiate price
▪ Reorganize warehouses
▪ Find optimal levels of stocks with respect to loss revenue
due to stock out and cost of frozen capital

22. 22
Typical problems in Distribution

23. 23
There are a few typical problem usually occur in logistics
Potential Problem
▪ Lack of control over the flow of goods in
distribution channels
Analysis needed
▪ Not optimal distribution model (distribution
channel structure, location, distribution centers
number. Analysis of distribution stage etc.)
Logistics
▪ Employed resources (people, cars, fork lift
trucks etc.) are higher than needs
▪ Low usage of cars
▪ Low planning of car routes
▪ Low customer service level (OTIFEF)
▪ Low level of returnable packaging return
▪ Level of control over goods in distribution channels (access to
stocks in warehouses in specific channels)
▪ Identification of alternative distribution models (Best practices
analysis, Competition analysis)
▪ Analysis of employed resources usage (f.e. Number of
shipments per one car, number of loading per one fork lift
truck etc.)
▪ Analysis of cars utilization (number of goods transported vs.
cars capacity)
▪ Analysis of car loading methods
▪ Analysis of car packing / palletizing methods
▪ Low customer service level (OTIFEF)
▪ Analysis of OTIFEF (execution of dispatch on ticme, fully,
without mistakes)
▪ Analysis of routes planning process, random analysis of real
routes
▪ Packaging sent vs. returned

24. 24
There are a few typical problem usually occur in stock management
Potential Problem
▪ Not optimal stock level (too less – shortages,
too much – risk of outdating, frozen capital,
wrong exploitation of depot etc.)
Analysis needed
Stock
management
▪ Analysis of the lever of order realization (number of executed
vs. number of accepted ) – Analysis of lost sales
▪ Analysis of products availability within last months
▪ Analysis of stock level vs. average monthly sale (sale coverage
with stocks, outdating risk)
▪ Analysis of the way in which stock level are evaluated
▪ Low usage of warehouse space ▪ Stocks levels vs. warehouse capacity (number of pallets stored
vs. theoretical number of pallet places), Analysis of warehouse
organization
▪ Employed resources (people, cars, fork lift
trucks etc.) are higher than needs
▪ Analysis of the usage of employed resources (i.e.. number of
loadings per one forklift, etc.), benchmarking between
warehouses / production plants
▪ High warehouse losses (shortages, damages,
utilization etc.)
▪ Analysis of warehouse losses costs and reasons
▪ High value of spoiled goods (f.e. outdated) ▪ Analysis of costs related to spoiled goods

25. 25
For more check the link with discount below. You will find there a lot
of cases with calculations and Excel provided.
Click to check my course
Supply Chain for Management
Consultants
$190
$15

26. 26
You can also check the presentation with an overview of my
most favorite functions in Excel
Essential Excel for Business
Analysts and Consultants
A practical guide
presentation

27. 27
Check what course will help you to be word class
Management Consultant
Top 10 courses that every
Management Consultant should
take
My super objective view
presentation

28. 28
There are also some books that I highly recommend
Top 25 books that every
Management Consultant should
read
My super objective view
presentation

29. 29
Subscribe to our channels:
www

30. 30
If you want to check how in practice to manage a consulting
project a would recommend my presentation
How to manage a consulting
project?
A practical guide
presentation

31. 31
You can also find some useful tips on Excel
Business modeling of offline
businesses in Excel
A practical guide
presentation

32. 32
You can also find some useful tips on Excel
Retail for Business Analysts and
Management Consultants
A practical guide
presentation

33. 33
Check my extensive presentation on productivity hacks to see
how you can me 10x more productive
Management consultant
productivity hacks
How to be lazy and still get things done
presentation

34. 34
Check my presentation on market research methods to
understand them properly
Market research
Practical guide for startups and entrepreneurs
presentation

35. 35
Check my other presentations
5 examples of business /
financial models in Excel
Practical guide how to check whether the business makes
sense
presentation

36. 36
Check my other presentations
Essential Lean Manufacturing for
Management Consultants
Practical guide how to cut costs
presentation

37. 37
Check my other presentations
What is an issue tree and how to
use it?
Practical guide with examples
presentation

38. 38
Check my other presentations
Excel shortcuts for Management
Consultants and Business
Analysts
Practical guide how to work fast in Excel
presentation

39. 39
You can also have a look at how to create a financial model in
Excel
Financial Modeling for Business
Analysts and Management
Consultants
Step by step guide
presentation

40. 40
Check also my other presentations
Management Consulting
Presentations
Practical guide how to prepare a great presentation
presentation

41. 41
Check my presentation that will help you get into consulting
How to get into consulting
Practical guide how to pass the case part
presentation

42. 42
I recommend also looking at some techniques to improve
your business. Click on the cover below to go to the
presentation
How to become world class
analyst
A practical guide
presentation

43. 43
Check also my other presentations
Management Consulting
Presentations
Practical guide how to prepare a great presentation
presentation

44. 44
Check also my other presentations
Production for Management
Consultants
Practical guide
presentation

45. 45
Check also business modeling in Excel
Business models
Practical guide for startups and entrepreneurs
presentation

46. 46
Check my presentation on starting and running consulting
company
How to create management
consulting presentations?
A practical guide
presentation

47. 47
Check my extensive presentation on productivity hacks to see
how you can me 10x more productive
Management consultant
productivity hacks
How to be lazy and still get things done
presentation

48. 48
If you need more detailed version on productivity hacks you
can check our course on productivity hacks
Click to check my course
Management Consulting
Productivity Hacks
$45
$15

49. 49
Check my presentation on starting and running consulting
company
Start and run consulting
company
A practical guide
presentation

50. 50
Check my presentation on restaurant business model to
understand it properly
How to open a successful
restaurant
A practical guide
presentation

51. 51
Check my presentation on on-line models to understand
them properly
On-line Business Models
A practical guide
presentation

52. 52
For more check also my on-line course
Click to check my course
On-line Business Models in Excel –
Practical Guide
$45
$15

53. 53
There is an interesting summary of ways to test cheaply
businesses
MVP – how to test your business
idea without building the
product
A practical guide
presentation