Hobbycraft have grown rapidly to meet the needs of the expanding market for craft based hobbies. They supplied their increasing numbers of nationwide stores from their original base close to the south coast of England.
When their warehouse buildings were reaching capacity, especially in the important trading period leading up to Christmas, Hobbycraft engaged The Logistics Business to carry out a review of their facilities and provide a plan to meet the required growth.
The Logistics Business analysis examined the flow of goods into the warehouse and the requirements for replenishment to stores. This analysis needed to take into account the increasing amount of goods sourced from the Far East as well as the innovative products brought in to the UK by Hobbycraft from the United States and Europe. To ensure timely delivery to the widely dispersed store network, alternative locations for the central distribution centre were considered along with possibilities for multiple warehouses. An important aspect of the process was to examine the effect of possible multiple warehouse operations on the stock holding requirement and the transport mileages incurred in operating the network.
A comprehensive model was constructed which quantified the transport costs to the store network. This model was run for a widely dispersed range of possible locations and combinations of locations including the original facility. In addition a high level review of the warehouse operating methods was carried out and indicated that although there were opportunities to improve storage density and make some improvements in operating methods, the requirements arising from the seasonal activity and the amount of directly imported product meant that the overall concept of the current warehouse was sound. This enabled direct comparisons in space requirements to be made between the various locations selected, leading to a clear definition of the relative weighting required in space and transport between North and South. Using their knowledge of regional rents and operating costs The Logistics Business were then able to produce a total distribution cost for each location or combination of locations.
The model was further developed to take account of other costs within the business and to use the accumulated knowledge of The Logistics Business to indicate the likely project costs to achieve the required change. The completed model enabled The Logistics Business to produce a final cost for the distribution operation over a planning horizon of several years. Using this model Hobbycraft could see the locations that produced the minimum cost and understand the differences that would arise if they were to choose other locations for non-financial reasons such as availability of existing facilities.