TriVista Identifies $17.9M of Annual Savings, Improving Cost Per Case by 18.6%

The Challenge

The client – a $4B leading American grocery store operator, with 200+ stores – had a current distribution network consisting of several distribution centers across the region. Due to the relatively condensed network, there were many overlapping shipments and duplications of inventory. The client’s leadership believed there was significant opportunity to optimize both the rooftop and inventory levels across facilities.

Our Approach

TriVista took a “clean slate” approach to understanding the future strategy and potential future network, looking to understand all areas of the business. TriVista completed the following activities to develop the initial scenario options:

• Interviewed key stakeholders and functional leaders
• Developed logistics heat map analysis to understand current lead times and opportunity for improvement
• Conducted in-depth network analysis of all shipment lanes (DC to DC and DC to store)
• Reviewed growth potential (organic and acquisition)
• P&L analysis

The Results

TriVista financially modeled the selected scenarios to identify key savings vs current state by analyzing:

• Personnel model
• Equipment, supplies, other recurring operational expenses
• Facility cost based on current lease agreements and exit timeline, and gathering current market lease rates for new facilities
• Freight impact based on the elimination of cross-dock activities in an optimized network

In addition to the annual savings, TriVista developed a one-time investment budget for each scenario which included:

• Severance, retention, and relocation costs for all personnel
• Facility investment at both the closing and new facilities
• New warehouse and equipment cost required to upfit
• Cost to relocate inventory between facilities
• Outsourcing of required processes (refrigeration)
• Required project management (internal and external)

The client was able to determine an optimal consolidation scenario to drive network improvements. The identified consolidation strategy will require phased approach, but ultimately generates $17.9M of annual savings, improving cost per case by 18.6%.