Food & beverage manufacturing
Five warehouses, and the case for running one.
A food and beverage manufacturer shipped from a plant in Fredonia, New York, to more than 100 destinations and kept product in five storage facilities. We used six months of shipments to price the network it had against a leaner one.
- Who
- Food & beverage manufacturer
- Data
- Six months, Jan–Jun 2022
- Network
- 1 plant, 5 warehouses
- Finding
- Consolidate to Auburn, NY
What was going on
Product left the plant for warehouses in Auburn, New York; Pittsburgh and Cleveland; Ross Township and Lake City, Pennsylvania, then went on to customers. NT already handled most of the outbound freight, so the as-tendered shipments gave a clean picture of what the current network cost.
| Origin | Trucks | Share |
|---|---|---|
| Auburn, NY | 509 | 44.1% |
| Fredonia, NY (plant) | 319 | 27.6% |
| Pittsburgh, PA | 102 | 8.8% |
| Cleveland, OH | 81 | 7.0% |
| Ross Township, PA | 72 | 6.2% |
| Lake City, PA | 70 | 6.1% |
| Total | 1,154 | 100% |
What we did
- Priced total landed cost: manufacturing, freight to storage, storage and handling, and freight to customer
- Costed every new lane pair with Auburn as the origin, using current destination rates and average fuel surcharges
- Weighed the added freight against the cost of running four more buildings
What we found
Moving everything into one warehouse big enough for every SKU adds about $325,000 a year in freight. Closing four other facilities more than covers it, so the recommendation was to consolidate into Auburn, which already originated 44% of the trucks.
UNT’s logistics seniors work a version of this problem in the capstone competition NT runs. The UNT Capstone →