Peach State Case Study

8/13/2019 Peach State Case Study

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Contact information

For any questions about this case study or other

Peach State capabilities please feel free to contact us.

Peach State Integrated Technologies

3005 Business Park Drive

Norcross, GA 30071

(678) 327-2000

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Table of Contents

Project Overview Demand Analysis

Customer Locations Network Model and Baseline Scenario Evaluation Summary and Recommendation Appendix

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Project Overview

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Project Background

PDQ Corporation is seeking a Distribution Network plan that will deliver high service levels during a period of growth.

Existing Facilities - PDQ currently has a single distribution center (DC)located in central NJ. All customers in the United States receive theirshipments directly from this DC.

Expansion - PDQ initially targeted the New York metro area and the northeastern states. A large untapped market exists in the rest of the country, and PDQ must consider how to serve these customers.

Service Levels - TPDQs promise of quick delivery is central to the philosophy of the company. In Europe, most customers can expect 24 hour

delivery. The goal of this study is to explore several service level scenariosfor the US market and show the type of distribution network that would berequired to achieve each target.

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Project Objectives

Peach State and PDQ agreed on the following project goals andobjectives to ensure success. Examine the historical demand : Build profiles of typical customer orders to understand the

current network.

Project future demand: Identify key markets that will be served in the future.

Rate the current network: Detail the service levels that can be achieved with the existing

facility. Design a network for the following scenarios :

Baseline Central NJ only How many DCs to reach 100% of the US in 24 hours? Best 1, 2, and 3 DC networks (3 scenarios) Best Central NJ + 1 DC network

Best Central NJ + 2 DC network Identify service levels: With each scenario, calculate how many customers can be served in

1 day, 2 days, or more.

Review existing warehouse: Make recommendations around space efficiency and processimprovements.

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Project Approach & Methodology

Peach State used historical shipment data and information abouttarget markets to build a model of PDQs network. Input Data: PDQ provided detailed information about products, order activity, and shipment

methods. The sample data provided covered June 2001 to June 2002.

Demand Analysis: Peach State examined the data and built profiles of the typical customerorder, daily order activity, and shipment method. This data was also used to do a product

velocity study which identified the fastest moving products. Customer Location: PDQ provided the BPIA buying power index which describes the

population of office workers in each U.S. county. This data was used to identify the largestmetropolitan areas in the U.S. which are important strategic targets for PDQ.

Network Modeling: A detailed model of the network was built using the data profiles.Using this model, Peach State located facilities to meet customer demand. This approachminimizes distance to the customer base and meets service level targets.

Scenario Analysis: A baseline scenario was compared with several other alternatives.Detailed maps and service levels are provided for each scenario. These will provide PDQwith a strong foundation for strategic expansion.

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Demand Analysis What does the typical order look like?

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Demand Analysis

Peach State used historical data to build profiles of PDQs shipping activity and customer demand.

Data was used to answer key questions: How many orders are received each day? Are sales levels increasing over time? How many shipments are sent via LTL carrier? Parcel carrier? What does the average order look like? How many products?

Average sizes? Total weight?

Which products are the fastest moving? What percentage of activitydo they represent?

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Orders per Day

The number of orders processed per day fluctuates, but it is most common to ship 55 to 65 orders per day.

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Shipment Volumes

January 2002 marked a step increase in shipment volumes.

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Parcel shipments constitute the majority of all shipments - more

Shipment Mode

than 60%.


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Units and Weight Per Order

Line, weight, and unit per order profiles can be examined to define the most suitable order fulfillment methodologies.

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Product Movement Profile

Order activity was analyzed for each product to distinguish fastest moving items from the slower moving ones.

0%

20%

40%

60%

80%

100%

1 192 383 574 765

Picks869 17,712 33% 80%870 3,324 33% 15%930 1,109 35% 5%

Total 2,669 22,145 100% 100%

Velocity Profile

956 1147 1338 1529 1720 1911 2102 2293 2484

# Products

% O

r d e r s

Product Movement # SKU's % SKU's % PicksFastest MoversMedium MoversSlow Movers

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Product Movement Profile

Using the product velocity profile, Peach State was able to identify operational improvements PDQ should consider.

An overview map of the warehouse was developed which shows where

products are stored.

Fastest moving items are shown in red, and are evenly distributed in the warehouse.

A revised approach to product storage could decrease labor costs and

shorten order cycle times.

A A A A A A A A C A A A A A A B C A A A A C A A A A A A A A A A AC A B A B B B B A C A A B B C C C A A A A C B B B A A BB A C A C B A A A A A A A A B C B B B C A B B A A A A A A A BB C C A C A A A A A A A A A A A A A A A A C A B A A B A A A A A C A A A A A A A AC A A B A B A A B A A A B A B B B B A A A A A A A A A A A B A

A B B B A A A A A A A B B B A A A BC A B C C A A B A B C B C C A A A A A A A A A B A B B B C B C A C C A A B A B B A A B C B A C A A B B A B A B B B C A C B C C B C C A C A B A A B C B A A A B C A A A C C C B C C B C B A B C A B C A B B A C A A A A B B A A

A A B A B C B C A A A B B A AC C A C C C A B B B C B B B A A C A B C A A B C A A A AC C C C C B C A C B C C B B C C A A C C A B A A A A BC C C C B C B B C A B B B C A A A B C A B C A B B A A B A B CC C C C C C B B A A B B C C B A B C C A A A B A B C A B A AC C B B C C B B A B A B B A A

C C B A A C C C C A B C B A A A C C A A B C B BC C C B C C A C C A A C A A B A A A A B B C C A A B A B B B B B C C A AC C C B C A C A C A B B A C A A A B A C C C B B C C B B C B C CC C C C C A B C A C B C C C B B C C B C B A C B B A C B A A B A C A B A C A A B A C C A B A B A A A B A A A A A B A B A A A A A B A A B B B A C A B BB B A B B A B C A B B B C A A B A A B A B B B B C C A B A B A A A B A A B A B C C C C C B C C A B B B C B B C A A B A C A B B A A C B A A B C B C B B B C B C B C C C B B C A A B A B B A B

A B B C C A A B B C B B B B C C C A B B A B B C B C A B BC C B C C B B C B C C A C C C B B C A A B A B B A B

A B B B A B A C A A B A B A A B A B C C C B C C B BB B B C C A B C A B B A B B C C C C A C A C C A B B C B A B B C A C CB B A A A A C B C B B C B C A C A B B A B C B A A B B A A C A C B C C A C A B C B B B A B B C A A B C A A B A A A A B A A A A B B B A B B C B C A B B A A A A B A A A A A A A C A B A B B A A B A A A B B B A B B A A B A B C B C B B B B B A B C A A B A A A B A A C A A C A A A A A B A A A C B B B A A B A B B C B A C B B B A B C C C A A B C C B B A C A B B A C B C A C B C C B C B A C C C C C B B C

A C C C C A B C A A A B B B A B C A B C B C C C A A B A A A A B C B B B A B B B C C A C B C C B C C C A A A A C A C B A B C B B B A A A C

A B B C C A B A A A B B C B A A B A B C A A B B C B B B A C A A A A A A A A A A A A A A A B B B A B A C A C B B B B B B A B C B B BB B B A B A A A A A C C A B B A A C A C C B C B B C A B A B B C C B CC A A B A B A A C A B A C C B C B C C C A C B B C B C C A A A A A A A A A B C A B B A B B A B B A A A A B A B B A B C A B C A A A A B

A A A A A B A A A A A A A B A A A B B A B C B A B A A A A A B A A B A A B A A A A A B A A B A A C A A A A B B C A B C C A B B B B B A B B B A C B C A A BB B B C A A A A B B C C A A B A A C A B C C A B B B C A B C A B B A C A C A A B A C C B C C A B C A B B A A C A A B A A A A A B A B C A A A A B C A B B A C A A B C A C A A A A A A B A B B A A C

A B C A A A A C A A A B B B A B A B A A A A B C C A B A A A A C C A B C A A A A A A A B A B B B C C A B B B B C A A C C A B B A A AB A A B B B C A C C A A A A B B B C C C B B B B B B C A C C C A B A A A A C A A B A B B C A B B B B C C C C A B A B C C A B A A B A A A B A B B B B B A A A A A C A B A A B A A A A C A C A B A A A A B A A C A A A B A A B A B A A A A A A A B B A A A B A A B A A B A A A A C A A B A A A A A A A A A A A A B A C A C B C A B C A B A A A C A A C B A A B A B B A A A C B CC C C A A A B A A A A B A A A A A B B A C C B C A B A B C A A A C C B B A B C A A C A A B A C C A B C A A A A B C A A B A A B B B C A A AB C B A B B B C B A B A A B B C C A A

A A A A B A A A A A A A A A B A A B A A A A A A A A B A A A A A A AB C C A B A B A A B A B C A A A A A A A A A B A C

A B A A A A B B A B A A A A A B B B C C C A B B A A A A C B A A A A B A A A A A B A A A A A A A A A A A A A A C A C C A A A A A A A A A A A A A A B A A A A A A A A A A C A A B

A A A A A A A A A A B B A A A A B B A A B A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A B A A A A A A A B C A B B A A A A A A B A A A A B A A A A A A A A A A A A A A A

= Future Addition A = Fastest Moving ItemsB = Medium Moving Items

= Current C = Slowest Moving Items

1601 16021616 1617 1618 1619 1607 1608 1610

1510

1609

1509

1603 1604 1605 1606 1611 1612 1613 1614 1615

1517 1501 1502 1503 1504 1505 1506 1507 1508 1511 1512 1513 1514

1417 1401 1402 1403 1404 1405 1406 1407 1408 1409 1411 14121410 1413 1414

0917 0901 0902 0903 0904 0905 0906 0907 0913 0914

0817 0801 0802 0803 0804 0805 0806

0908

0813 08140807 0808 0809 0810

1315 1316 1317 1301 1302 1303 1304 1305 1306 1307 1308 1309 1310 1311 1312 1313 1314

1215 1216 1217 1201 1202 1203 1204 1205 1206 1207 1208 1209 1210 1211 1212 1213 1214

1115 1116 1117 1101 1102 1103 1104 1105 1106 1107 1108 1109 1110 1111 1112 1113 1114

1015 1016 1017 1001 1002 1003 1004 1005 1006 1013 10141007 1008 1009 1010

0703 0704

1011 1012

0811 0812

09120909 0910 0911

0709 07100705 0706 0707 0708

0613 06140603 0604 0605 0606 0607 0608

0713 07140711 0712

0505 0506

0609 0610

0501 0502 0503 0504

0611 0612

0406

0107 0101 0102 0103 0104 0105 0106

0301

0401

0203 0204

04050402 0403 0404

03050205 0206

1515 1516

1415 1416

03020201

0303 0304

0715 0916

0615 0816

0915 0916

0815 0816

R e c e i v

i n g ,

P a c

k i n g ,

S h i p p

i n g

A r e a

0916

0816 0601 0602

0701 0702

OFFICE 03060202

987604422

TotalFacings

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Summary of Demand

The observations of the demand analysis were used to model PDQs U.S. distribution network.

For the purposes of the network study, we assume that customers behave the same no matterwhere they live in the U.S. The order size, order value, frequency, and return rates all followthe typical customer profile.

The number of daily orders can fluctuate over a wide range. The distribution network must be

flexible to allow for this variability. Sales have been steadily increasing in the U.S. and this trend should continue as PDQ enters

new markets. The distribution network must be able to handle this future growth.

Parcel shipments account for over 60% of the customer orders. This has been consistent overtime, and is dependent on product type. PDQ must be equally capable of meeting servicetargets with both parcel and LTL shipments.

More than half of the orders are for a single product only, and 80% of the volume is driven bythe fastest one third of products. PDQ should examine its shipping operations to build inefficiency. For example, single line orders could be batch picked to reduce travel time. Evensmall improvements in order fulfillment methodology could yield significant results.

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Customer Locations Where are the largest markets?

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Office workers

customers. The data includes

workers in large,

offices. Alaska and

Hawaii wereexcluded fromthe study: this

of the total population.

workers in the United States, divided into 3,109 counties.

Geographic Analysis of Demand

are PDQs target

small, and home

was only 0.12%

PDQ provided BPIA data which shows the population of office


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defined by the U.S.Census Bureau.

86 percent of U.S.

office workers live

consumers tend tolive in these metroareas also.

easily focused onthese dense areas.

To speed calculations, Peach State grouped demand into largemetro areas made up of several counties.

Demand Aggregation

302 Metro areas are

in these areas.Style conscious

Marketing can be


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The network modelwill focus on thelargest cities first.

This level ofaggregation allowsfaster modelingresults but does notaffect validity.

Final results will bereported using the

full 3,109 countylist and 100% of the

population.

areas represent 58 percent of U.S. office workers.

Analysis of Demand

The largest 50 metro areas are used in the network study. These


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Analysis of Demand

Customer orders and returns should follow the same geographic

distribution as the population of office workers in the U.S. California, New York, and Texas have the largest concentration of office workers. The central area of the U.S. is sparsely populated compared to the coasts.

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Network Model and BaselineWhat service can PDQ provide with its existing distribution

center in central NJ?

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Baseline Network

With just one distribution center located in New Jersey, PDQ willnot be able to meet its service targets nationwide.


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The first

scenarioincludes onlythe existing

facility incentral NJ.This scenariowas used as

the index torate all otherscenarios.

Baseline Network


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If PDQ starts marketing tothe entire United States,only 29% of LTL volumeand 20% of parcel volumewill be within a one dayservice area from theexisting facility.

Parcel Service Levels

20%15%

31%

12%

22%

78%

100%

20%

35%

66%

0

5

10

15

20

2530

35

1 Days 2 Days 3 Days 4 Days 5 Days

Business Days in Transit

P e r c e n

t o f

C u s t o m

e r s

0%

20%

40%

60%

80%

100%


20%15%

31%

12%

22%

78%

100%

20%

35%

66%

0

5

10

15

20

25

30

35



P e r c e n

t o f

C u s t o m e r s

0%

20%

40%

60%

80%

100%

LTL Service Levels

29%

56%

73%

82% 85%

99.7%

0

1

2

3

4

5

6

7

1 3 5 7 9 11 1 3 15 17 19 2 1 23 25 27 2 9 31 33 35 37 39 41 43 45 4 7 49 51 53 5 5 57 59 61

Hours from DC to Customer

P e r c e n t

o f C u s t o m e r s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Within 2 Days Within 3 DaysWithin 1 Day Within 4 Days Within 5 Days Within 6 Days

LTL Service Levels

29%

56%

73%

82% 85%

99.7%

0

1

2

3

4

5

6

7

1 3 5 7 9 11 1 3 15 17 19 2 1 23 25 27 2 9 31 33 35 37 3 9 41 43 45 4 7 49 51 53 5 5 57 59 61


P e r c e n

t o f

C u s t o m e r s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Within 2 Days Within 3 DaysWithin 1 Day Within 4 Days Within 5 Days Within 6 Days

Baseline Network

PDQ uses both LTL and Parcel shipments. With the existingnetwork, some customers can expect to wait a week for delivery.

This chartshows how longLTL shipments

take to reachthe customer.

All calculationsare based on 10

hours at 50miles per hour,for 500 miles

per day.

This chart showshow long Parcelshipments can

take to reach thecustomer. The

source dataassumes UPS

Ground shipment.

Drivers travel 500 miles per day, based on a 10 hour shift at 50 mph.

Based on quoted duration of UPS Ground service.


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Scenario Evaluation How many distribution centers does PDQ need?

Where should they be located?

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Scenario Overview

Several different scenarios were considered using the model. Each was compared to the baseline to rank its performance.

One day service nationwide: How many distribution centers are neededto reach 100% of the United States in 24 hours?

Best 1 DC network: If PDQ only has one DC, where should it be?

Best 2 DC network: Where should 2 DCs be located? How is serviceimproved?

Best network with Central NJ + 1 other DC: If PDQ added one new DCto its existing facility, where should it be placed?

Best 3 DC network: Where should 3 DCs be located? What are the

additional benefits? Best network with Central NJ + 2 other DCs: In addition to the existing

facility, where should two new DCs be located?

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Scenario: One Day Service

nationwide is still not possible.When 10 DCs are placed to minimize cost, one day service


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Scenario: One Day Service Distribution

centers are located near major metropolitan areas to

reduce the overall cost of the network.

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Scenario: One Day Service

With 10 facilities nationwide, service levels would be very high.The operating costs would also be extremely high.

LTL Service Levels

100%100%95%

0

5

10

15

20

25

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30


P e r c e n

t o f

C u s t o m e r s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Within Two Days Within Three DaysWithin One Day

LTL Service Levels

100%100%95%

0

5

10

15

20

25

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30


P e r c e n

t o f

C u s t o m e r s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Within Two Days Within Three DaysWithin One Day Most of the countryreceives 1 day service.Large geographic areasof the country receive 2day service, but thenumber of customers inthese areas is very small.

reach customers in one business day.


Most parcel shipments will Parcel Service Levels

69%

30%0.5%

70%

99.5% 100%

0

10

20

30

40

50

60

70

80

1 Days 2 Days 3 Days


P e r c e n

t o f

C u s t o m

e r s

0%

20%

40%

60%

80%

100%


69%

30%0.5%

70%

99.5% 100%

0

10

20

30

40

50

60

70

80



P e r c e n

t o f

C u s t o m e r s

0%

20%

40%

60%

80%

100%


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Because most of the population lives in the eastern half of the

Scenario: Best 1 DC

country, a single facility would be located centrally.


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Distribution

activities areroughly 16-20%

the baselinescenario. Thislocation waschosen to reducethe total network

customers willhave slowerservice.

Scenario: Best 1 DC

more efficient than

cost, but some


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100%

31%

100%

Scenario: Best 1 DC

This scenario cannot reach either of the largest markets in oneday, but achieves higher overall service than the baseline.

LTL Service LevelsLTL Service Levels

88Within 1 DayWithin 1 Day Within 2 DaysWithin 2 Days Within 3 DaysWithin 3 Days Within 4 DaysWithin 4 Days Within 5 DaysWithin 5 Days

100%

100%100%

7773%73%

82%82%86%86%

90%90%


The UPS parcel network

0

1

2

3

4

5

6

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49


P e r c e n

t o f

C u s t o m e r s

0%

10%

20%

30%

40%

50%

60%

70%

80%

31%

0

1

2

3

4

5

6

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49


P e r c e n

t o f

C u s t o m e r s

0%

10%

20%

30%

40%

50%

60%

70%

80%


12%

47%

22%20%12%

58%

78%

0

10

20

30

40

50

1 Days 2 Days 3 Days 4 Days


P e r c e n

t o f

C u s t o m

e r s

0%

20%

40%

60%

80%

100%


12%

47%

22%20%

100%

12%

58%

78%

0

10

20

30

40

50



P e r c e n

t o f

C u s t o m e r s

0%

20%

40%

60%

80%

100%usually follows the same behavior as the LTL roadnetwork.


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Scenario: Best 2 DCs

By adding a second DC, the network is able to serve both coastswith one day service, and reach most of the country within 3 days.


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100%


Virtually all of the country can be reached in 3 days from the twolocations in this scenario.

LTL Service Levels

100%

83%

49%

0

2

4

6

8

10

12

14

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30


P e r c e n

t o f

C u s t o m e r s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


LTL Service Levels

100%

83%

49%

0

2

4

6

8

10

12

14

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30


P e r c e n

t o f

C u s t o m e r s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Within Two Days Within Three DaysWithin One Day Although there is a smallarea of southern Texasthat receives 4 dayservice, the populationthere is minimal.

receive a parcel shipmentwithin 3 business days.


92% of the nation would Parcel Service Levels

11%

56%

25%8%11%

67%

92%

0

10

20

30

4050

60



P e r c e n

t o f

C u s t o m e r s

0%

20%

40%

60%

80%

100%


11%

56%

25%8%

100%

11%

67%

92%

0

10

20

30

40

50

60



P e r c e n

t o f

C u s t o m e r s

0%

20%

40%

60%

80%

100%


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Scenario: Central NJ + 1 DC

Adding a second DC to the current network has very similarresults compared with the Best 2 DC scenario.


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The existing

site is not theoptimallocation for a

DC, but the

the network is

not reducedsignificantly.

the original DC should bedone only ifother needsarise.


efficiency of

Relocating


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100%

27%

49%

86%

42%

100%


A small section (3%) of the country receives only 4 day service inthis scenario. Houston is the only metro area in this region.

LTL Service LevelsLTL Service Levels100%

97%97%Within One DayWithin One Day Within Two DaysWithin Two Days Within Three DaysWithin Three Days Within Four DaysWithin Four Days99 100% 100%88 90%90%

73%73% 80%80%77

P e r c e n

t o f

C u s t o m e r s

P e r c e n

t o f

C u s t o m e r s

70%70%6660%60%55 42%50%50%

4440%40%

33 30%30%

22 20%20%

11 10%10%

00 0%0%

22 44 66 88 1 0 11 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 2 6 2 7 2 8 2 9 3 0 3 1 3 2 3 3 3 4 3 5 3 6 3 7 3 8 3 9 4 011 33 55 77 99 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40

Hours from DC to CustomerHours from DC to Customer


Overall, service is only Parcel Service Levels

26%23%

37%

13%0.2%

99.8%

0

5

10

15

20

25

30

35

40



P e r c e n

t o f

C u s t o m e r s

0%

20%

40%

60%

80%

100%


26%23%

37%

13%0.2%

100%99.8%

27%

49%

86%

0

5

10

15

20

25

30

35

40



P e r c e n

t o f

C u s t o m e r s

0%

20%

40%

60%

80%

100%slightly lower than thescenario with the Best 2DC network.


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Adding a third DC brings the national service level even higher.

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100%


Most of the nation could receive 2 day service with a 3 DCnetwork. Shipments can reach the largest markets in only 1 day.

LTL Service Levels

65%

94%

0

1

2

3

4

5

6

7

8

9

10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30


P e r c e n

t o f

C u s t o m e r s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Within Two Days Within Three DaysWithin One Day

LTL Service Levels

65%

94% 100%

0

1

2

3

4

5

6

7

8

9

10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30


P e r c e n

t o f

C u s t o m e r s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Within Two Days Within Three DaysWithin One Day Of the 50 largest U.S.

metro areas only Seattle,Miami, and FortLauderdale would notreceive at least 2 dayservice.

parcel shipments within 3 business days.


All customers could receive Parcel Service Levels

29%

55%

15%

30%

84%

100%

0

10

20

30

4050

60



P e r c e n

t o f

C u s t o m e r s

0%

20%

40%

60%

80%

100%


29%

55%

15%

30%

84%

100%

0

10

20

30

40

50

60



P e r c e n

t o f

C u s t o m e r s

0%

20%

40%

60%

80%

100%


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Scenario: Central NJ + 2 DCs

This scenario is almost identical to the Best 3 DC scenario since the existing DC is

within 50 miles of the optimal location.

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48

The

performance ofthis scenario isstatisticallyidentical to the

solution.


Best 3 DC


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Again, this solution provides the the same service as the

Best 3 DC scenario. LTL Service Levels

100%93%

66%

0

2

4

6

8

10

12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30


P e r c e n

t o f

C u s t o m e r s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


LTL Service Levels

100%93%

66%

0

2

4

6

8

10

12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30


P e r c e n

t o f

C u s t o m e r s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Within Two Days Within Three DaysWithin One Day The 2 day service level isonly 1% less than the

previous scenario.



32%

57%

10%

32%

89%100%

0

10

20

30

40

50

60



P e r c e n

t o f

C u s t o m e r s

0%

20%

40%

60%

80%

100%


32%

57%

10%

32%

89%100%

0

10

20

30

40

50

60



P e r c e n

t o f

C u s t o m e r s

0%

20%

40%

60%

80%

100%


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Summary and Recommendation

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This chart shows the performance of the LTL distribution network

under each scenario in the study.

Scenario Summary - LTL


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Scenario Summary - Parcel

This chart shows the performance of the parcel distribution

network under each scenario in the study.

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Recommendations

Peach State recommends the following implementation plan for

PDQ during their period of growth in the U.S. market. Existing Facilities: The existing facility was placed in an important strategic location. It is

not necessary to relocate this facility to increase customer service. However, relocation may be necessary for operational reasons, such as outgrowing the current facility.

New Facilities: Adding a second distribution center near Los Angeles would achieve three

day service levels for 97% of the target customers. Based on the population, shipments fromthis facility would only represent 25-30% of total U.S. sales volume. Additional Expansion: If higher service levels are required or if sales volumes increase, a

third facility could be added to the network. With a third facility, PDQ could provide 2 dayservice to 93% of the country.

Detailed Cost Analysis: A more in depth study would provide a view of PDQs actualdistribution costs. This analysis should consider the transportation, inventory, and operatingcosts of PDQs distribution network. PDQ should consider all relevant costs to determinewhether a new facility can be justified economically.

Inbound Shipments: Without actual cost data, it is not possible to identify the best ports to bring products into the U.S. Peach State can provide a framework for these decision for PDQto use in the future.

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Recommendations

Appendix

Scenario: Central NJ & Reno Scneario: Central NJ & Las Vegas BPIA Data: 50 Top Metro Areas

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Instead of placing a second DC in California, PDQ could locate

Scenario: Central NJ & Reno

in Reno, NV to share space with its sister company.


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Scenario: Central NJ & Reno

This network is

less efficient thanother scenarioswith 2 distributioncenters. However,it is still asignificantimprovement overthe baselinenetwork.

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57

Based on distribution alone, Las Vegas is not the best city for a

second DC. However, other factors may outweigh transportation.

Scenario: Central NJ & Las Vegas


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Residents of

possibly

increase insales.


PDQs facility

costs may beless expensivein Las Vegasthan in the Los

Angeles area.

Californiawould not haveto pay sale tax,

providin an


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Service levels in this scenario are similar to other options.



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Peach State used the top 50 metro areas to design the U.S. network.

BPIA Data: Top 50 Metro Areas

Documents

Peach State Case Study