Case Study
$5M in annual transportation savings projected
Comparable investment to maintain existing network vs. modernize
Operational efficiencies across combined banners
1,000+ stores, multi-banner retail network
Greater than $1B annual revenue
7 fulfillment centers
A large U.S. retailer operated two separate fulfillment networks, one serving consumer locations and another serving the professional channel. Each network had its own facilities, creating duplication in transportation lanes, imbalanced inventory, and uneven facility use. With aging tech and the cost to operate rising, they needed a plan for modernization and increased efficiency.
The retailer engaged Summit Advisory Team to evaluate the feasibility and impact of consolidating its fulfillment network from seven facilities to four multi-banner locations serving both consumer and professional channels. The objective was to create a data-backed plan that would reduce operating and transportation costs, address capacity constraints, and modernize aging systems without compromising service levels.
Summit’s scope included modeling the operational and financial impacts of consolidation, assessing facility expansion requirements, recommending technology upgrades to support future growth, and developing a phased roadmap through 2029 to guide the transition.
The Summit team identified several opportunities to help the retail giant modernize its operations in the most efficient way possible.
The transportation analysis revealed a major cost-saving opportunity. Because the consumer and professional networks operated independently, many transportation lanes overlapped, creating inefficiencies across parcel, LTL, and line haul shipments. Consolidating the networks would remove this redundancy.
Facility analysis showed that service levels could be maintained, and in some cases improved, by strategically expanding and reconfiguring certain locations. While some facilities had room to absorb additional volume, others would require targeted investments in expansion or layout optimization to meet throughput requirements.
The financial modeling demonstrated that the capital required to modernize the network was comparable to the cost of simply maintaining the outdated systems and infrastructure. By pursuing consolidation and modernization together, the retailer could achieve a stronger long-term return on investment and reduce operational risk tied to aging equipment and technology.
Inventory modeling identified opportunities to improve storage efficiency by prioritizing top-selling SKUs and reducing the volume of slow-moving products consuming valuable space. This shift would free capacity for high-velocity items and support the smooth integration of inventory from both banners into fewer facilities.
Summit followed a structured, multi-phase approach:
Summit reviewed the client’s existing network, including operating costs, transportation expenses, technology systems, and inventory distribution. This baseline provided a clear picture of the current state and informed scenario modeling.
The team modeled the redistribution of inventory from seven facilities into four, evaluating each location’s throughput capacity and storage requirements while taking into account the complexities of integrating two distinct channels. This analysis highlighted where facilities had available capacity and where space or throughput constraints would require targeted expansion or operational changes. It also identified opportunities to rebalance the product mix, prioritizing high-velocity SKUs, reducing slow-moving items, and freeing up valuable space to support the increased volume in the consolidated network.
Building on the facility and inventory redistribution plan developed in Phase 2, Summit evaluated small parcel, LTL, and line haul movements, uncovering substantial overlap between the two brand networks. The integrated network design optimized transportation lanes and pool points, reducing redundancy and improving delivery efficiency. These changes were projected to generate multimillion-dollar annual savings while maintaining service standards.
Drawing on the facility and inventory redistribution analysis from Phase 2 and the transportation impact findings from Phase 3, the financial model compared baseline operating (opex) and capital expenses (capex) against multiple consolidation scenarios to determine the most cost-effective path forward. It incorporated closure-related expenses such as lease terminations, severance packages, and inventory write-offs, ensuring that all one-time costs were fully captured. The analysis also evaluated the investment required for technology upgrades, including a phased rollout of a new warehouse management system to minimize operational disruption. This comprehensive approach provided a clear view of both the short-term financial impact and the long-term return on investment.
Summit’s recommendations gave the retailer a clear path to modernize its fulfillment network while delivering significant cost savings earlier in the transformation. The phased roadmap balanced upfront closure and technology investments with measurable long-term benefits, ensuring both operational and financial alignment.
The roadmap extended through 2029, balancing up-front closure and technology costs with substantial savings. The plan was validated by the client’s finance team, which found that Summit’s operational perspective complemented their internal high-level analysis and provided a more practical, execution-focused strategy.