Distribution Strategy for GlaxoSmithKline

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Distribution Strategy for GlaxoSmithKline (GSK)

GlaxoSmithKline is a British multinational pharmaceutical, biologics, vaccine and consumer healthcare company. Our work focused on its U.S. distribution operations.

Project Objectives/Challenges

GSK sought to develop a new distribution strategy for the Southeast and Midwest regions, but wanted to maintain its West Coast and Northeast locations as “fixed.”

GSK needed to determine if the existing Southeast sites should remain part of the future distribution network or be consolidated, as well as the sizes and locations of any new distribution facilities.

The objectives were to reduce transportation, lower fixed and variable costs, and optimize inventory levels at various service level scenarios.

What Sedlak Did

We built a baseline model from which to compare various scenarios and developed nearly 20 distinct scenarios (e.g., 3- and 4-DCs, fuel sensitivity, sourcing options) to compare cost and service levels.

Cost and service metrics were compiled and evaluated for each scenario.

Results

Based on our analysis, we recommended a preferred 3-DC option with a new consolidated site in the Midwest, as well as a preferred 4-DC option with two new sites in Missouri and Georgia.

Each option reduced transportation expense equally, and rising fuel costs did not impact the DC locations based on the inbound/outbound shipment profile.

Recommended network options maintained targeted service levels.

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