ONE SIZE DOESN’T FIT ALL: A VETERAN’S INSIGHTS ON DISTRIBUTION CENTER DESIGN

As someone who has spent decades in the trenches of distribution center design, I can tell you one thing with absolute certainty: no two DCs are ever the same. It’s tempting to think you can use a cookie-cutter approach, especially when dealing with the same client or similar industries. But trust me, each distribution center (DC) has its own unique set of requirements and challenges. Even in foodservice distribution, where things might look identical on paper, reality paints a different picture.

The Myth of the “Cookie-Cutter” Approach

You might wonder why we can’t just plug and play with DC designs. After all, wouldn’t it be more efficient to replicate a successful model? But what works brilliantly in one location can fail miserably in another. This is due to a host of factors that influence each DC’s design and operation.

Geographical Differences

Consider a major distributor of construction products with DCs across Canada. In the West, this company focuses heavily on waterworks and infrastructure materials due to the region’s robust public works projects and frequent rainy weather. This means the DC there needs extensive outdoor storage for pipes and hydrants, as well as specialized handling equipment.

Move to Eastern Canada, and the picture changes entirely. Here, the focus shifts to household plumbing supplies, driven by an older housing stock that requires regular maintenance and updates. The DC in this region might prioritize indoor shelving for smaller, high-turnover items like fittings and fixtures, necessitating a completely different layout and inventory system. The geographical differences dictate the types of products stored, the layout of the DC, and even the workforce skills required.

Market Preferences

When it comes to consumer preferences and regional variations, the ownership of Circle K by Alimentation Couche-Tard sheds light on the complex market dynamics this convenience store giant operates within.

Originally known as Couch-Tard in Quebec, they’ve expanded globally, acquiring new stores and rebranding as Circle K elsewhere. With Circle K’s headquarters in Arizona with a strong foothold in Asia, it’s clear that what works in a Hong Kong Circle K would vary compared to a Circle K in Pheonix, or even a Couche-Tard back in Quebec. The DC(s) supporting these stores needs to handle a different range of SKUs, storage conditions, and distribution schedules. Ignoring these nuances can lead to inefficiencies and customer dissatisfaction.

Other Factors

• • Regulatory Realities: Compliance with local laws affects sourcing, storage, and distribution practices.
  • Real Estate Roulette: Availability and costs of real estate influence site selection and operational costs.
  • People Power: Workforce skills, availability, and labor costs shape staffing decisions and operational efficiency.

The Great Mayo Debate

Here’s a fun example: mayonnaise. East of the Mississippi River, Hellmann’s rules the roost, while Best Foods dominates on the western side. Despite being essentially the same product, both owned by Unilever, these brands have built distinct followings due to historical marketing. The division of preferences and brand affinity towards Hellmann’s versus Best Foods has stirred up quite the discussion if you look online – but this is besides the point. The point is this regional divide isn’t just a trivial fact; it significantly impacts the distribution strategy. A DC in the East will stock a lot more Hellmann’s, while a DC in the West will be filled with Best Foods. This affects everything from shelf space to ordering volumes and delivery schedules. The same basic design principles apply, but the specifics change based on what people in each region want.

To make things more interesting, let’s consider Denver, Colorado. Here, both mayo products are distributed, as Denver is seemingly a neutral party in the great mayo debate. Applying the same design logic to different sets of data—consumer preferences in this case—results in differing DC and network design outcomes. The DC needs to optimize its storage to balance the stock of both mayo brands, ensuring neither runs out and both are readily available.

We can also consider a DC straddling either side of the Mississippi River, catering to both regional preferences. It must ensure that the right mayo gets to the right location. Trucks need to deliver Hellmann’s to the East and Best Foods to the West. What happens if the wrong mayo ends up in the wrong place? It’s a logistical nightmare that can lead to delays, increased costs, and unsatisfied customers. It might seem trivial, but to these passionate mayo fans, it’s a serious matter.

Tailoring Distribution Center Design Logic

When you apply the same design logic to different sets of data, the outcomes vary because the inputs themselves differ. Factors such as SKU variety and volume are distinctly influenced by regional specifics. By embracing local insights—from customer preferences to regulatory landscapes—companies can effectively customize their supply chain strategies, including how they design their DCs, to meet the unique demands of each market. It’s not a cookie-cutter approach; it’s a data-driven dance that ensures efficiency, responsiveness, and competitive advantage.

Conclusion: Embracing the Unique Nature of Each DC

In my experience helping clients navigate DC design, I’ve come to appreciate the beauty in its diversity. Each project is a unique puzzle, shaped by the specific needs and challenges of its location and market. I’ve never encountered a scenario where one DC design could simply be replicated elsewhere without thoughtful adaptation. As much as we’d love to simplify things with a plug-and-play approach, the reality is far more complex, and far more rewarding.

 

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