Merge & Outsource Parts Distribution Operations - A $560M cargo lift manufacturing division of a $3.6B European industrial company was tasked to merge parts distribution operations of two subdivisions and to reduce operating costs and headcount by outsourcing the combined warehouse to a capable third-party logistics (3PL) service provider on a short timeline.

The project started with extensive demand forecasting and inventory analysis for both subdivisions, and evaluation of an existing company warehouse as a potential site for merged distribution operations. Excess and obsolete inventory was trimmed. The existing DC required layout and storage configuration changes to accommodate parts inventory and operations. A formal RFP was conducted to select a 3PL to operate the combined DC.

Mission accomplished. The 3PL was implemented over 4 months. The cost savings from the project helped the client to increase the operating margin by 18% in the next year despite a 7% decrease in net sales.