What happens when you are one of the world’s most respected names in lighting, but your supply chain comes with unnecessarily high costs and leaves customers waiting for shipments? It’s time to reconsider your logistics strategy and your transportation technology, and optimize around customer service and best pricing.
Halco Lighting Technologies is a leader in commercial and industrial lighting. Add a growing specialty market with lighting for pools, spas and landscaping, and the company’s growth potential was only limited by its logistics network.
A legacy plan added significant costs and delayed shipments to customers as freight moved primarily from Halco’s headquarters near Atlanta. Client service needed to improve through faster shipments, but cost control was essential.
Working with Transportation Insight, the Halco leadership team identified supply chain issues and unnecessary touchpoints that drove up shipping charges and extended time-in-transit. Using multiple network design models focused on service optimization, Halco is now putting the right products in the right places. With an expert partner and transportation technology, Halco is reducing its freight bills and improving customer satisfaction to all-time highs.
Trouble on the Supply Chain: Logistics Before Optimization
Historically, Halco’s freight travelled in a boomerang pattern. Products imported on cargo ships from Asia crossed the Panama Canal before arriving at company headquarters in Norcross, GA. From there, select inventory moved to four North American distribution centers: two company-owned centers in the Southwest, and two smaller facilities in the Northeast. This created a supply chain imbalance: the largest warehouse in Norcross was over capacity, while the four remaining distribution centers were under-utilized.
Most orders were fulfilled by the headquarters warehouse. If some items in an order were located in another warehouse, products were re-shipped to the distribution center closest to the client before final delivery to the customer’s location.
This created multiple problems, but the most notable was disarray across the supply chain. Halco customers expect orders to process within one business day, so that they can provide for their consumers. With an average of 2.5 internal shipping touches per order, order fulfillment was unnecessarily delayed. Additionally, the constant internal shipments forced Halco to pay notably high costs for less-than-load freight.
“The network optimization conversation started with our executive team asking ‘Are we in the right locations?’ And does it make sense size-wise with everything? Do we have facilities in the right places?” noted Jason Deist, Chief Operating Officer of Halco Lighting Technologies.
“Wherever we have distribution, we have better sales. When we ran the numbers, our network originally made sense because that’s where our sales are. But are we sized correctly?”
Fit for the Big Picture: Optimizing the Supply Chain
Transportation Insight examined the inner workings of Halco’s distribution network and supply chain. Supply chain specialists quickly discovered the company’s distribution centers were in the right places, but each location was not utilized to the full potential.
First, evaluation focused on current shipping costs to create several visual data models that explored how Halco could best optimize. By modelling each potential scenario, the supply chain experts identified options to maximize the customer experience.
To improve import handling, Transportation Insight recommended that Halco direct inbound products to two locations: the headquarters hub in Norcross and the western-most hub. From there, products naturally flow to the distribution centers. The western distribution center supplies products for itself and the southwestern center, while the Norcross center provides stock for the two distribution centers in the north.
Next, our experts examined the utilization of each distribution center. Because the majority of products shipped from Norcross, the other supply centers were under capacity. Analysts discovered Halco could reduce shipping time and cost by increasing the number of products moving from the northeast facility.
Supply Chain Optimization Creates New Opportunity
With Transportation Insight’s help, Halco using transportation technology to identify recommendations for creating a better customer experience. The company is stocking each distribution center with a wider array of products, all available for faster shipment. Through the alignment plan, Halco has the flexibility to complete most orders with one shipment from the nearest center, reducing both costs and time-in-transit.
“We are now in the process of increasing capacity in all warehouses by balancing out our network,” said Deist.
“We understand lighting customers don’t want to wait several days for a product to get to them from another warehouse – so this optimization will get products to them with minimal delays.”
Working through the improvement plan, Halco is also exploring how to consolidate smaller shipments into heavier loads. Unifying less-than-load shipments means more freight gets to each distribution center at once. This diversifies the amount of product inventory available across all four fulfillment points and reduces the number of shipments needed to complete an order.
Setting Up for Future Growth
Transportation Insight is standing with Halco to complete every step of the optimization plan. As supply chain enhancements occur, our leaders provide key analysis to determine optimal product placement for Halco’s northern distribution centers, while increasing specialty product availability in Norcross.
Once network optimization is complete, our supply chain managers analyze forecasting models to better anticipate customer needs by geographical location and season. By keeping stock at the right place for its customers, Halco is fulfilling orders correctly, quickly, and at the best possible price. That allows this global lighting leader to continue delighting customers and master its supply chain.