Challenge
D2C business from Middle East was expanding its offering to multiple markets in Europe using air freight express shipments for last mile deliveries. Existing supply chain structure was significantly hindering its operational efficiency and escalating costs. The setup was a one-size-fits-all model that didn’t scale well.This inefficiency in the supply chain was not only affecting the company’s profitability but also limited its ability to meet market demands regarding delivery time and customer experience.
Actions
To address these challenges and improve their profitability in the long run company decided to open new Business Unit in Europe. With our support company undertook the following strategic initiatives: Road to Market Definition – the company conducted throught long term planning regarding volume per market, required product flow and expected order profile. Fulfillment Network Design – Based on the insights from the road to market analysis a throught scenario planning for various possible network designs was conducted. This included number and spatial location of fulfillment centers, comparison of cost structures between own investment and cooperation with 3PL service providers, as well as business risk assesment connected to all presented options. Technology Architecture Analysis – Alongside physical product flow and required organizational changes information systems reconfiguration analysis was conducted. The scope included company Warehouse Management Systems, Order Management System, and available Supply Chain Planning tools. After the Network Design for Europe was accepted by company executive team we have also led the selection and negotiation process with 3PL located in Poland and France.
Results
The redesign of company supply chain and new network design for Business Unit in Europe enabled company to grow it’s business 4x times within the 1.5 years, significantly reducing the operations costs as a percentage of the topline revenue and improving customer experience and increasing customer loyalty. The new supply chain setup, tailored to the specifics of different customer groups, led to improved efficiency and productivity. Company was able to offer its products to customer across Germany, France, Spain, Italy, Sweden, Poland, and Romania within maximum 3 days after order placement (with 96% of orders being actually delivered within 2 business days) linking 2 warehouses in Europe with over 10 sales channels (own country stores and marketplaces like Amazon, Allegro, CDiscount, ePrice, eMAG, and others). This success story highlights the transformative impact of leveraging data and advanced analytics to identify and most optimal distribution network, underscoring the importance of data-driven decision-making in achieving operational and financial improvements.
Short summary
A Middle East D2C business expanded into Europe with careful fulfillment network design and technology analysis. The redesign of the supply chain enabled the company to grow its business in Europe 4x in 1.5 years, reduce operational costs, and improve customer experience. Company started to serve 8 countries within 3 days. Data-driven decision-making played a vital role in achieving these operational and financial improvements.