practical distribution network to
meet those requirements.
Turek says Caribou needed a way
to deliver a “good outside assessment” of the effect that growth in its
commercial business, as well as
other business units, would have on
its inbound and outbound activity.
Turek also wanted to know, based
on various sales and inventory alternatives, when Caribou would experience capacity crunches so severe
they could disrupt its business.
“We wanted a heads-up on when
and where our pain points would
be,” he says.
After conducting its analysis, TZA
concluded Caribou would be best
served by staying with a single DC
in the Minneapolis area, given that
most of its vendors were already
based in the Midwest. At the same
time, it warned the company that
based on the various growth scenar-
ios, Caribou’s DC would likely reach
capacity sometime in the 2009–10
time period.
GETTING ON THE GREEN
As in 2007, TZA’s updated assess-
ment indicated that Caribou’s best
bet would be to stick with a single
DC in the Minneapolis area. It also
estimated that a 7-percent increase
in rack locations would be enough to
extend the life of the current facility
and meet the company’s short-term
needs. At the same time, the model
showed that to handle its projected growth,
Caribou would eventually require a facility
of between 150,000 and 200,000 square feet.
Turek says the company would likely move
its DC operations to a bigger location rather
than expand its current facility.
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A BETTER PLAN
Travis Staley, a TZA project manager who
coordinated the Caribou project, says the
modeling tool is beneficial for any company
trying to understand how the many variables
that affect its operations will drive future
inventory and distribution requirements.
“The result is that we help build a better
plan for a company’s future needs,” he says.
“Without it, a company like Caribou might
not know how [various growth scenarios]
would affect its inventory requirements.”
Most important, Turek says, the model
minimizes the risk that Caribou will over-
spend on any future DC budget allocation.
Or, worse yet, underspend.
Without the modeling software, he says,
“we might come up short” in estimating
Caribou’s capacity needs accurately. The
TZA tool “keeps us from reacting and pan-icking, signing leases under duress instead of
[following] a planned and methodical
process,” Turek adds. “It has helped us extend
the life of our facility and get better utilization out of it, all the while getting a peek [at]
what our next ‘pain points’ may be.”
