Optimizing Distribution Network to Enhance Cost Efficiency by 23% and Overall Service Quality for an Indian Logistic Unicorn

Business Challenge

A leading logistics unicorn based in India, with revenue exceeding $500 million, faced mounting pressures to maintain high service levels at minimal prices due to intense competition from regional and global players. The client, offering end-to-end logistics services, including warehousing and last-mile delivery, encountered significant challenges during its expansion phase.

High Competition Pressure

Warehouse Inefficiencies

Increased In-House Costs

To ensure service quality, the client rapidly opened multiple warehouses across the country, which led to operational inefficiencies. Many warehouses were either underutilized or overburdened, and decentralized decision-making by regional managers caused most orders to be routed through warehouses, driving up in-house costs (IHC). The client required a comprehensive solution to optimize its distribution network by determining the ideal warehouse size, identifying new warehouse locations, and exploring drop-shipping opportunities to streamline operations and reduce costs.

How Quantzig Helped

Quantzig adopted a comprehensive, multi-faceted approach to address the client’s challenges and optimize their distribution network. The first step involved developing a framework to identify orders suitable for drop-shipping, using a multi-factor comparison to streamline operations. To address warehouse inefficiencies, Quantzig designed a break-even simulation tool to determine the optimal size of warehouses, allowing for under-sizing where needed based on regional demands and variances.

Additionally, Quantzig analyzed warehouse utilization patterns and regional demands to uncover warehouse consolidation opportunities, enabling the client to optimize their existing network. To further enhance efficiency, Quantzig identified strategic locations for new warehouses, aligning with regional demand patterns and distribution costs to build a robust and cost-effective logistics network.

Results & Impact

Quantzig’s intervention delivered transformative results for the client. 24 warehouses were deemed unnecessary and shut down, while 5 new warehouses were established in strategically chosen locations to support demand more effectively. Additionally, the optimization efforts resulted in a 23% reduction in rent expenses, driven by under-sizing and warehouse consolidations. These improvements reduced logistics costs and enhanced service quality.