Shift in consumer preference sparks need for network redesign
Shaw Industries, a global flooring provider headquartered in Dalton, Georgia, is a leading provider of carpet, wood, resilient, tile & stone, and laminate flooring, as well as synthetic turf, for residential and commercial applications. Shaw manages 116 manufacturing and distribution facilities in 30 states, completing 4500 customer deliveries each day totaling over $5B in annual sales.
Shaw began manufacturing carpet in 1967, which was its principal business for many years. As consumer preferences shifted from carpet to hard surfaces, Shaw adjusted with the market, and now a large percentage of its business is hard surfaces. Originally designed for distributing rolls of soft flooring from its plants in Dalton, the supply chain network was not well-designed for handling palletized product sourced from disparate domestic and global sources.
Shaw recognized the need to redesign its supply chain to more efficiently handle both rolls and pallets from many sources. Lacking an internal modeling team of their own, Shaw Industries engaged Chainalytics’ supply chain design practice to guide this redesign.
The project goals centered around identifying the least-cost go-forward network that met the service requirements of the business, also factoring in business risk and operational complexity. This would call for the evaluation of new and existing distribution centers and various inbound and stock-holding strategies for imported products. Once certain strategic opportunities were identified, Chainalytics worked with Shaw to conduct a qualitative and sensitivity analysis of these strategies to arrive at a go-forward distribution network recommendation.
The project identified both short- and long-term opportunities for Shaw. The short-term opportunities came from changes in product flows that would produce a reduction in interfacility transfers and warehouse handling activity, allowing manufacturing and distribution centers to operate more efficiently. Chainalytics also helped Shaw identify potential changes to the Regional Distribution Center (RDC) network that could impact 15-20% of the locations through resizing, relocation, and closure, further reducing annual operating costs. In addition, the team discovered several cost saving opportunities available through product-specific import and stocking strategies. By positioning higher-volume imports closer to demand, Shaw was able to reduce overall freight and handling costs. In testing these strategies, the team discovered that the overall RDC network design was robust across the various import strategies modeled.
While supply chain network redesign requires significant analytical effort and capital investment, the resulting benefits can be large and long-lasting. With the aid of the Chainalytics partnership, Shaw Industries now more efficiently serves its customers while maintaining and exceeding the customer service performance that helped to establish it as an industry leader.
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