MSC Industrial recently announced that they are building a $55 million distribution center in Columbus, OH. This will be their fifth distribution center (or Customer Fulfillment Center- CFC). They are building it “to support its growth strategy and maintain its signature service model as the Company grows.”
Here is a key quote from the press release:
”Our current success and growth plan requires us to add a new CFC to support our world-class service model as we continue to grow. After conducting a thorough review, Columbus provided the most compelling opportunity to expand our distribution network in the most cost-effective manner, in a region that fits well with our existing network and provides easy access to key markets and resources, as well as a rich pool of local talent. Over the long-term, our investment in this facility will yield high returns as we more efficiently manage and expand our service volume.”
Although this article does not mention network design directly (although they do mention “conducting a thorough review”), $55 million decisions like this usually don’t happen without some type of network design and optimization. When firms are spending this much money on a facility, they do not want to put it in the wrong place.
Also, it is interesting to note that the new center was added to support growth and service, not reduce costs.