Manufacturing and Supply Chain Expert, Lisa Anderson, MBA, CSCP, CLTD, president of LMA Consulting Group Inc. was quoted in ACHR News about moving a distribution facility, and why it is a huge decision.
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Moving a distribution facility is a huge decision. Choose the correct location, and your gross profits will increase for years to come. But choose incorrectly, and your customers could switch to a competitor, quality employees may leave, and profit could be reduced. It’s not a decision to be taken lightly.
LOCATION, LOCATION, LOCATION
“Similar to selling a business, it isn’t the best plan to evaluate whether to renew a lease at the last minute or to be forced into a particular partner or location because you started preparing ‘too late,’” said Lisa Anderson, founder and president of LMA Consulting Group, in her blog post titled “Should I Move?”
Instead, she recommends weighing a number of factors to ensure a distributor does not regret where it moved. As today’s customers become more and more accustomed to companies like Amazon, delivery time becomes even more important.
“We also need to remember that customers expect rapid deliveries, change their mind frequently (and expect agility), and desire easy returns,” she said.
Distributors need to consider their customers, and need to consider their proximity and access to freight partners.
“No matter how close you might be to your customer, freight can add up — and, more importantly, delays to your customer are very costly (lost business, charge backs from customers such as Walmart, ill will, and more),” she said. Freight rates are increasing, and having a carrier at your current location does not guarantee having access to one wherever you choose to move. Transportation networks are important too, as distributors may need to have access to network options like parcel, rail, and ocean freight, according to Anderson.
In the end, Anderson said that distributors can tend to view moving locations as an exercise in reducing costs, and not much else.
“As important as cost is, taking the strategic high-level view can ensure your service, total cost (including hidden costs), and cash flow are maximized,” she said.
Published in ACHR News on Dec. 2, 2019