Speaker 1: This week we are talking about distribution networks and why you should be reviewing yours. All will be explained coming right up. So one of the things that I've enjoyed doing with consulting clients over the last 30 years or so is looking at their distribution networks. Why do I enjoy that? I love the whole sort of engineering analytical component of it because there's lots of moving parts and stockholding locations and different transport modes and so on. But also it can deliver such enormous benefits if you know you can tweak it and improve it. So if you haven't looked at your distribution network in the last five years or so I would urge you to have a look and I'm going to talk through some of the reasons why you need to look at it. Either do it yourself or reach out for some help or whatever. So what are some of the things that happen which makes your distribution network no longer efficient? So some of the things that I've seen over the last 30 years or so and particularly in the last couple of years are merger and acquisitions. So I've been involved in so many of those through Logistics Bureau where we've actually ended up working for both sides of an M&A sort of transaction and trying to improve their networks and then merge them as they come together. Because obviously what they're looking for is synergies from merging two organizations to make the whole you know the new one network much more efficient. So that can be a very good time or a requirement to actually undertake a network study to try and improve it. So that would be one of them. Number two and this is probably more common particularly with a lot of larger organizations is as their product portfolio expands and as their customer range expands, what you generally find is that the distribution network starts to become quite inefficient. Facilities could be squeezed for space, maybe the transport network's not operating as efficiently as it once was. So that you know increasing cost and declining service levels can be a little bit of an indicator that there's really not you know that that distribution network isn't quite as efficient as it used to be. So watch out for that. Number three and of course we've seen this enormously over the last five years probably particularly is new distribution channels opening up. So you know gone are the years where it used to be one if you like channel through your distribution network. Now it's multi, now it's omni-channel in most organizations. And I think a lot of organizations still don't quite understand that where you have multiple channels through your network it can sometimes require a bit of a hybrid distribution network. It's not easy, so for example it may not be easy for you to be doing online B2C orders out of a bulk warehouse. Generally it's pretty tricky because the setup and the requirements for fulfilling those orders are quite different. So that will often throw up a need for a network review and in fact we've done quite a few of those over the last couple of years where companies have got more and more into the sort of online space and looked at you know should we bolt on that sort of capability onto our existing warehouses? Do we develop new ones totally just for that channel? Where should they be? And of course there's no one single answer it depends very much on the organization and the industry and so on. So that's another really good reason to have a look at your distribution network. Another reason and it's kind of linked to that would be new service offers. Particularly over the last couple of years of course with you know the sort of complete blowout and home deliveries a lot of organizations have suffered from that thing that supply chain people hate which is a lot more frequent and a lot smaller orders and particularly with sort of things like home deliveries. So where service offers can change significantly that's going to have a significant impact on a distribution network and it's probably good enough reason alone to actually check it, do a bit of benchmarking maybe, give it a bit of a health check to see how it's performing. Is it still fit for purpose? You know really gone are the times when you would set up a distribution network and it would be kind of you know fire and forget you'd leave it there for 20 years. I can remember when I first got into supply chain and then when I got into consulting 30 odd years ago you know distribution networks were a little bit like that. The last 10-15 years now you've got to be constantly reviewing the performance and tweaking and innovating and trying to make sure that you know you're keeping up with the competitors and that your distribution network is really being effective. The fifth thing I wanted to mention and probably one of the core reasons to have a look at your distribution network these days is changes to costs. So we have certainly seen that with freight costs be that you know road freight, air freight. Here where I'm based in Australia we've seen huge disruption of road freight with floods and so on so you know all of that has an impact on your distribution network. In fact I was watching the news the other day where I think it was in Western Australia there are floods and they're resupplying supermarkets by you know doing an extra 2,000 kilometre loop or something trying to get into them so that's rare. I'm not saying you're going to rejig your distribution network for that but what I'm saying is that the freight environment is constantly changing and the costs are changing. We've just had some major freight companies go out of business you know so it's a constantly changing market so that can have a significant impact on your distribution network. Likewise with warehousing and on a couple of videos recently I mentioned that a lot of companies are looking at their warehousing this year last year you know over that sort of period because they're needing more space they're wanting to be more efficient they're opening up you know warehouses for new markets and so on so that is another lever that's a key part of your distribution network. And then finally in terms of costs, what about ocean freight costs? I mean that went through the roof over the last couple of years and now they've plummeted. You're saying well what does that got to do with distribution networks? Well if you're looking at you know importing product your ports of entry are now impacted you know likewise you know where are you bringing product into your local distribution network all of that is up for grabs and for analysis and reconsideration I'd suggest. So quite a few reasons to keep on top of your distribution network you know constantly be having a look at it don't just look at the sort of basic KPIs look forward as to you know what's happening in the business and obviously how you're going to be coping in the business over the years to come and what shape that distribution network may have to morph into. The big players are generally good at this but you know the sort of medium-sized organizations tend to kind of think it's a little bit too hard don't think like that. Review your distribution network, look forward with your business plans and how that distribution network may have to change to support the business. So there we go I think that was five reasons why you might want to review your distribution network. Maybe you can think of another reason so what were my five? Merger and acquisition activity, new products and customers, new channels to market, new service offers, changes to costs. What would you add? Love to hear in the comments down below what what's happened maybe in distribution networks that you know that caused a re-evaluation of the shape and operating style of that network. So there we go. Thank you for watching this week and I'll see you next time. Bye for now.