The Census Bureau just released the statistics needed for Chicago Consulting to update its Ten Best Warehouse Networks. They are used by leading manufacturers, distributors, and retailers to improve customer service, identify new sites, and reduce costs.
These networks are “best” because they are “fastest to market.” They provide the lowest possible average distance and lead-times to the market represented by the U.S. population. For example, if one warehouse were in any location other than Washington, IN, the distances and lead-times would be higher than 825 miles 2.33 days respectively. Similarly if three warehouses were in any locations other than Norristown, PA; McKenzie, TN; and Bakersfield, CA, the distances and lead-times from that 3-warehouse network would be greater than 397 miles and 1.34 days.
The firm has noticed important trends over the 15 years it has specified these networks. The population has sifted toward the South—both the Southeast and the Southwest—driven especially by Florida’s growth. Over a ten-year period the single best warehouse location migrated from Terra Haute, IN to Bloomington, IN and now Washington. IN. Florida’s growth has been reflected in the emergence of West Palm Beach as a location in the 7-, 8-, and 9-warehouse networks. Previously the most Southern location was Lakeland, FL.
These networks are generic in that they are derived from US population and its geographic distribution. When designing warehouse networks for specific organizations many other issues should be considered including:
- Competitors and their service and cost strategy
- The actual demand pattern—the company’s and the market’s
- Services customers respond to—particularly lead-times and product availability
- Costs, especially for transportation (both inbound and outbound), warehousing and inventory
Despite their generic nature these networks are used by many supply chain executives to benchmark their own locations. They typically compare their networks to the “best” with the same number—their 5-warehouse network to the “best” 5-warehouse network, for example.
The U.S. economy is about 66% driven by consumer spending that takes place close to them. Therefore, many businesses’ actual demand patterns closely parallel the US population. Even many industrial products will have a demand pattern closely resembling the US population pattern. On the other hand, a few businesses distribute their products dissimilar to the population; agricultural goods such as crop seed, fertilizer and farm implements and parts are examples.
Chicago Consulting has compiled these networks from proprietary software the firm developed to design warehouse networks for its clients and from just released U.S. Census Bureau data. The Census Bureau has taken this long to release data at the detail necessary to perform the analysis.
ABOUT CHICAGO CONSULTING
Chicago Consulting designs and engineers supply chains for manufacturers, distributors and retailers. It fits together components such as inbound logistics, warehouse networks, inventory deployment, transportation, operations within warehouses and the systems that assist these functions. The firm is 25 years old, has its headquarters in Chicago with offices in Shanghai and Johannesburg. The firm’s website is www.chicago-consulting.com and phone number is (312) 346-5080.