For our client, being a successful CPG conglomerate means having trusted brands that can operate in their own unique ways to deliver their customers’ unique expectations. So whether it’s toothpaste for Tina or dog food for Fido, the company prides itself on balancing multiple customer experiences while also ensuring its fans can easily get the go-to products they rely on.
But amid big new swings in demand (who didn’t get a pet during the pandemic?) and distribution options, the company’s “do-you” brand commitment was creating inefficiencies in its US supply chain operations. The company had nine brands operating 30-plus distribution centers between them, working with multiple third-party logistics providers. There was also no consistent technology footprint—procurement, warehouse management, and even enterprise resource planning (ERP) systems differed by brand—and operational practices varied by brand and location.
The result: Rapidly rising fulfillment costs and increasing timeline challenges, against a backdrop of other macro supply chain pressures.
A fragmented distribution network that was a growing risk
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KPMG worked with our client’s e-commerce supply chain team on a six-month project in 2022 to do a thorough analysis of the current distribution network and then develop a roadmap for optimization that included multiple implementation scenarios, timelines, and recommendations.
Some significant game changers were quickly identified, starting with the consolidation of the 30-plus scattered distribution centers down to 7 centralized locations over five years. The company could also use the brands’ combined buying power to improve terms with logistics partners, reducing transportation costs by $2 million over the five-year plan, even while adding additional freight to meet rising demand. Delivery timelines were also reduced to a two-day window for 99 percent of customers, whether through retail partners or small parcel delivery to homes and offices.
Finally, moving to a more centralized distribution operation with standardized technologies positions the company for millions of dollars more in ongoing cost efficiencies over the five-year plan while providing dynamic new insights from real-time reporting.
A detailed roadmap for a fully optimized supply chain
Can you ship a few boxes of soap along with that pallet of 10-pound bags of dog food?
It’s not a trick question, but it was, initially, a tricky challenge for our client to solve. Its brands thrive on delivering trusted, count-on-us consumer experiences. But, increasingly, delivering each brand’s actual products via siloed fulfillment operations was becoming less efficient and more costly by the day—posing risks to that peerless customer relationship.
Now the company has a clear roadmap to identify where, how, and when its brands can best collaborate along all parts of the supply chain, with a five-year, step-by-step timeline to make that complex operational transformation a reality.
Beyond simply identifying cost and time savings, though, the company is now more strategically positioned to adjust to the inevitable “next” supply chain shocks while keeping pace with the always evolving expectations of their customers—regardless of whether those customers are on two legs or four.
Using strength in numbers (when it makes sense)
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