Network Analysis for Forward-Deploying Implements & Attachments

At A Glance:

Carlisle performed an in-depth network analysis for a heavy equipment (construction) OEM to identify the trade-offs of forward-deploying implements and attachments into their U.S. spare-parts distribution network. The optimal outcome would not only increase service levels to customers by decreasing lead times, but also provide better availability and network-wide inventory control. The project recommendation for improving these two factors will result in a projected 12.5% increase in implement and attachment sales per year for the OEM.

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The Context:

The construction implements and attachment industry has been a competitive space for decades. The aftermarket offers retailers and end-customers a proven and efficient alternative, emphasizing the need for a reliable source of implements and attachments from the OEM. Following a former Carlisle recommendation to add U.S. network capacity through the addition of a distribution center (DC) to their network in a high sales demand region, the OEM now had the network capacity to support forward-deployment of implements and attachments. The move would provide enhanced service levels to retailers and provide a reliable source to order from.

Carlisle assisted the client in assessing all supply chain costs incurred by adding implements and attachments to their spare parts distribution channel. A sales opportunity analysis was also performed, to quantify the return on investment that an increase in service levels would provide.

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The Approach:

To execute this network analysis, Carlisle followed a three-step approach:

• Supply Chain Data Analysis: Cleansed and validated supply chain data to provide an extensive network analysis of the client’s current state implements and attachments business
• Network Modeling: Simulated the client’s current state network, along with multiple future state forward-deployment scenarios. Outputs from the models were used in a cost-to-serve analysis to detail:
  • DC space (storage) requirements
  • Transportation costs
  • Warehouse property/fixed costs
  • Inventory carrying costs
  • Network labor requirements
• Service Level and Sales Opportunity Analysis: Evaluated service level improvements, as well as sales and units in operation (UIO) data, to realize the resultant potential sales increase for storing product closer to the retail base

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The Result:

Forward-deployment of implements and attachments to the client’s network DCs would significantly enhance service levels to retailers.

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Order Response Time (ORT)1-2 Day ORT2+ Day ORT

Baseline26%74%Forward Deployment45%55%

The inventory move would also decrease the average distance between a retailer and the implement and attachment supply point by over 40%, and allow for increased implement and attachment supply to be stored in the network. Additionally, the increase in product availability and decrease in lead-time could lead to a significant return on investment for the OEM, as customers will be less likely to turn to the aftermarket due to a stockout at the retailer.