Warehouse and Store Network Optimisation for Retailers in Australia and New Zealand
In today’s rapidly evolving retail landscape, achieving operational efficiency and meeting customer expectations have never been more critical. Retailers across Australia and New Zealand face increasing pressure to streamline their supply chains while also maintaining flexibility to respond to changing market conditions. A key aspect of this effort is optimising warehouse and store networks to align with demand, cost pressures, and resource availability.
Warehouse and store network optimisation allows businesses to not only meet operational needs but also to drive profitable growth. In this article, we’ll dive into the primary drivers of a network review, explore diagnostic technology options available, and discuss the importance of creating a digital twin for your network. We’ll also touch on scenario modelling, inventory assessment, and planning implications, all of which are integral to achieving optimal performance. Lastly, we’ll discuss how Trace Consultants can guide your business through this complex journey.
Drivers of a Network Review
Retailers in Australia and New Zealand must contend with various external and internal factors that necessitate a review of their warehouse and store networks. The drivers of a network review may include:
- Business Growth and Expansion
As companies expand into new regions or markets, the existing network configuration may no longer be adequate. New distribution points may be required to support faster delivery times and lower transportation costs. Additionally, entering new markets brings new customer expectations, which need to be factored into the network design. - Customer Expectations and Omnichannel Fulfilment
The rise of e-commerce and omnichannel retailing has transformed customer expectations. Today’s consumers demand fast, flexible delivery options, such as click-and-collect, next-day delivery, and same-day fulfilment. To meet these expectations, retailers must optimise their store and warehouse networks to ensure inventory is located close to the customer. - Supply Chain Disruptions and Volatility
Recent years have demonstrated the importance of a resilient supply chain. Retailers face increasing challenges from global supply chain disruptions, labour shortages, and resource constraints. These disruptions highlight the need for a flexible and adaptive network that can withstand external shocks while continuing to meet business and customer demands. - Rising Operational and Transportation Costs
Cost pressures are another driver of network optimisation. Rising fuel prices, labour costs, and transportation expenses all contribute to an increase in operational overhead. Optimising the placement and size of warehouses, as well as recalibrating delivery routes, can mitigate these costs and improve profitability. - Sustainability and Environmental Goals
Sustainability is increasingly important to consumers and stakeholders alike. Retailers must optimise their networks not only to meet operational goals but also to reduce carbon emissions and promote sustainable practices. Strategic warehouse placement and optimised transportation routes contribute to reducing environmental impact.
Diagnostics Technology for Network Optimisation
Once the need for a network review has been identified, retailers can utilise advanced diagnostics technologies to evaluate and redesign their supply chain networks. These technologies allow businesses to assess their current configuration and explore opportunities for improvement.
- Constraint-Based Linear Programming Tools
Linear programming tools, such as Trace Consultants' in-house development of constraint-based optimisation software, are vital for network diagnostics. These tools allow retailers to model their existing network configuration, taking into account key constraints such as capacity, resource availability, transportation costs, and delivery timeframes. By simulating various scenarios, the tool can identify inefficiencies and provide data-driven recommendations for improvement. - Digital Twin Representation
A critical aspect of effective network optimisation is establishing a digital twin—a virtual replica of the existing supply chain network. This digital twin allows retailers to accurately model their warehouse and store network, capturing everything from inventory levels to transportation routes. A true baseline network must be established and calibrated against real-world data to ensure that any proposed changes align with operational realities. - By creating a digital twin, retailers can simulate different scenarios and explore the impact of potential changes before making decisions. The digital twin also enables continuous monitoring of network performance, allowing for proactive adjustments when disruptions occur.
- Scenario Modelling Capabilities
Scenario modelling is essential for evaluating the impact of different network optimisation strategies. Retailers can use scenario modelling to test various configurations, such as opening or closing warehouses, consolidating distribution centres, or reallocating inventory to specific locations. Each scenario can be assessed for its effect on cost, efficiency, and service levels, helping retailers make informed decisions. - Advanced scenario modelling tools, such as those offered by Trace Consultants, allow retailers to factor in variables like resource constraints, margin targets, demand fluctuations, and operational disruptions. By comparing different options, businesses can identify the optimal strategy that balances profitability with operational efficiency.
- Inventory and Planning Implications
Network optimisation also has direct implications for inventory management and planning. As networks become more efficient, retailers can reduce the amount of inventory required to meet customer demand while maintaining service levels. Optimised warehouse placement allows for faster replenishment times and more precise inventory allocation, reducing stockouts and excess inventory. - Advanced planning systems (APS) are often integrated with the network optimisation process to ensure that inventory levels are aligned with real-time demand signals. This results in improved inventory turnover, reduced carrying costs, and enhanced customer satisfaction.
Establishing a True Baseline Network
Before embarking on the journey of network optimisation, it is critical to establish a true baseline for your current network. This baseline provides a starting point for evaluating performance and identifying areas for improvement. Key steps in establishing a baseline include:
- Data Collection
Collect comprehensive data on all aspects of your network, including inventory levels, warehouse capacity, transportation routes, customer demand, and operational costs. This data forms the foundation for creating a digital twin of your network. - Calibration of the Digital Twin
The digital twin must be calibrated to reflect real-world conditions accurately. This includes factoring in external variables like lead times, market conditions, and supplier constraints. Calibration ensures that the digital twin provides an accurate representation of your network’s performance and allows for effective scenario modelling. - Network Performance Analysis
Once the digital twin is calibrated, perform a detailed analysis of network performance against key KPIs, such as transportation costs, service levels, and inventory turnover. Identify bottlenecks and inefficiencies that can be addressed through optimisation.
How Trace Consultants Can Help
Warehouse and store network optimisation is a complex, multi-faceted process, but it offers substantial benefits in terms of cost savings, operational efficiency, and customer satisfaction. Trace Consultants specialises in guiding retailers in Australia and New Zealand through this journey by providing:
- Advanced Diagnostic Tools: Our in-house constraint-based, linear programming tool provides a powerful diagnostic capability, enabling us to model your existing network, assess constraints, and simulate optimal solutions.
- Scenario Modelling Expertise: We help retailers explore various network configurations through scenario modelling, comparing the costs and benefits of each option to identify the best strategy for optimisation.
- Digital Twin Creation and Calibration: Trace Consultants helps you establish a true baseline for your network by creating and calibrating a digital twin. This virtual representation allows you to test changes and optimise your network with precision.
- End-to-End Optimisation: From data collection to scenario modelling and implementation, Trace Consultants provides end-to-end support for your network optimisation journey. Our team of experts ensures that all changes are aligned with your strategic objectives, improving both operational performance and profitability.
Example Outcomes of Network Optimisation
When warehouse and store networks are effectively optimised, retailers can expect the following outcomes:
- Cost Reduction
By strategically placing warehouses and optimising transportation routes, retailers can reduce transportation costs and minimise fuel consumption. Additionally, optimised inventory management leads to lower carrying costs and reduced risk of stock obsolescence. - Improved Customer Service
An optimised network ensures that products are available when and where customers need them, leading to faster fulfilment times and enhanced customer satisfaction. Retailers can offer more flexible delivery options, such as same-day or next-day delivery, to stay competitive. - Increased Agility
A flexible and efficient network allows retailers to respond quickly to changes in demand, disruptions, or market conditions. This agility ensures that your business remains resilient and capable of adapting to new challenges. - Sustainability
Network optimisation can help retailers meet their sustainability goals by reducing carbon emissions through optimised delivery routes and reduced fuel consumption. Additionally, more efficient warehouse operations contribute to less waste and improved energy efficiency.
Optimising warehouse and store networks is a critical lever for achieving operational excellence and maintaining profitability in the retail sector. Retailers in Australia and New Zealand must consider a range of factors when undertaking a network review, from customer demand and cost pressures to supply chain disruptions and sustainability goals.
Advanced diagnostic technologies, such as constraint-based linear programming tools and digital twin representations, enable retailers to model their existing networks and explore optimal solutions through scenario modelling. By partnering with Trace Consultants, you can ensure that your network optimisation journey is data-driven, strategically aligned, and designed to deliver long-term success.
Are you ready to transform your warehouse and store network? Contact Trace Consultants today to discover how we can help you achieve operational efficiency, cost savings, and customer satisfaction through effective network optimisation.
Contact us today, trace. your supply chain and procurement consulting partner.
