Utility Warehouse Consolidation…A Waste of Time or Cost-Savings and Performance Driver?
In a recent article, “Electric Utility Inventory Analysis and Optimization,” we addressed ways in which electric utilities can determine how much inventory they need to support a company’s generation, transmission, and distribution assets. Looking beyond optimization, utilities should also consider how their warehouse network strategy is impacting supply chain performance and costs. Implementing an improved warehousing strategy has enabled some supply chain organizations to realize savings that equate to 10% to 15% of their total inventory value.
Whether warehouse growth was the result of mergers/acquisitions or the expansion of transmission and distribution service coverage, a large driver of supply chain costs is the number of Maintenance, Repair, and Operations (MRO) warehouses in a utility’s service territory. Once supply chain organizations realize the cost implications of running multiple warehouses, they will often begin an initiative to evaluate the benefits of MRO warehouse consolidation.
Although warehouse consolidations have the opportunity to drive significant cost reductions, these moves may increase costs or negatively impact the performance of work crews if not done correctly. Based on our experience, there are five key factors for a successful warehouse consolidation. Download this report for additional information.
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