This document discusses the changing dynamics affecting distribution centers and implications for location strategies. Key factors driving changes include shifting global sourcing costs, rising fuel costs, and environmental concerns, which are resulting in needs for more and smaller distribution centers located closer to consumer markets. An effective location selection process involves defining strategy and criteria, evaluating a universe of locations, screening to a shortlist, and finally selecting locations based on factors like market access, transportation networks, costs and incentives. Coordinating supply chain, real estate, transportation and economic development is important for future network optimization.

1. Getting From Here to There
The Changing Distribution Center
JOC – EAST COAST MARITIME CONFERENCE
September 28, 2010

2. CHANGING DYNAMICS
• Changing role of facilities
• Goods in motion
• Shifts in global sourcing
• Labor vs. transport costs, Risk management
• Fuel costs & environmental factors
• Fuel escalation + GHGs = more, closer DCs
• Organizational factors
• Departmental vs. enterprise goals
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3. IMPLICATIONS FOR LOCATION STRATEGIES

4. LOCATION PROCESS
The Location Process allows for progressive testing and narrowing of
alternatives based on business drivers
Field Validation
Final
Negotiations
Planning and Network Location
and
Strategy Modeling Screening
Location
Selection
Cost
Modeling
Defined Strategy Universe of Short-List of
and Evaluation Criteria Location Candidates Location Candidates
Preferred and Alternate
Location(s)
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5. KEY LOCATION CRITERIA
Ability to Access Key Markets or Customers
Interaction with Transportation Network
Labor and Workforce
Total Cost Environment
Availability and Cost of Suitable Facilities
Utilities
Permitting and Regulation
Tax Environment
Public Sector Assistance and Incentives
Climate and Natural Hazards
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© 2010, CWS Consulting Group LLC

6. DRIVERS FOR NETWORK OPTIMIZATION DECISIONS
National Supply Chain - Future
• Increased focus on moving goods in an effective, efficient, and
environmentally friendly manner to consumer clusters
• Corresponding need to move some production closer to areas of
consumption
• Increased diversification in modes of long-distance goods
movement (road, rail, water)
• Increased need to coordinate between supply chain strategy and
real estate (or land use and transportation )
• Increased need for intermodal transferability
• Inventory demands different based on real estate decisions
• All of the above working in an inflexible real estate environment
© 2010, CWS Consulting Group LLC

7. MEGAPOLITANS
National Supply Chain - Future
Megapolitan America, New Metropolis Lecture Series, Metropolitan Institute at
Virginia Tech, September 2006
© 2010, CWS Consulting Group LLC

8. THINGS TO THINK ABOUT

9. BEST PRACTICES
First Steps
Overall
• More (and Smaller?)
• Multimodal Connectivity
• Emphasis on both Total Landed Cost and Flexibility
• Coordinate Transportation, Land Use, and Economic Development
Efforts
• Be Creative
© 2010, CWS Consulting Group LLC

10. Chris Steele
Phone: (617) 314-6527
Email: chris.steele@cwsgrp.com
THANK YOU VERY MUCH