Problem

This distributor in the Montreal area has seen a sales growth of over 20% over the past 3 years.

The options considered by the client were renting a new warehouse to take the surplus stock, expanding the current warehouse or moving to a larger warehouse since the warehouse occupancy was over 130% of its area.

Solution

Support offered at three levels:

• Inventory analysis and optimization

• Assessment of the space required to support a 20% increase in all storage areas

• Cost assessment of the various options considered

Results

The decision, taken following the analysis of the different scenarios, was to expand the current warehouse by 70,000 sq. ft. to increase the total area by more than 35%.

This solution resulted in an occupancy percentage below 80%.

In addition to the cost and return on investment aspect, this choice was a strategic one in the context of the company’s growth, since the impact of a move would have been risky considering the volume of orders processed by this distribution center. This decision allowed the customer to review their methods to improve inventory management. In addition, they will be able to assess the need for a partial or complete move of product or customer segment if the growth continues.