Case Study: Fashion Retailer Distribution Network

Integration Assessment of Retail DC Operations and Optimizing Distribution Network to Drive Synergies Across Retail and E-commerce

A leading fashion retailer faced a pivotal moment as the lease on a key distribution center approached expiration, with no option to renew. The company was operating across five distribution centers in Canada - two in the Greater Toronto Area and three others along the east and west coasts. Increasing rental costs, alongside inefficiencies in layout and operational processes, placed growing pressure on the network, making a comprehensive overhaul essential. 

We set out to transform the company’s distribution network with clear goals: aligning operations to industry best practices, optimizing for cost-efficiency, and enabling sustainable growth. Additional objectives included consolidating the closing distribution center, integrating retail and e-commerce operations, and building a flexible, future-ready supply chain that could adapt to disruptions. 

To navigate this complex challenge, we implemented a two-part solution: an in-depth facilities assessment paired with a full-scale network optimization strategy. Using a structured, three-phase approach, we began by evaluating the closing distribution center, assessing the potential to merge it with a nearby facility to cut costs and streamline operations. The second phase focused on designing a future-proof distribution network that minimized costs, improved service levels, and built in scalability for growth.

The implementation kicked off with a detailed data collection process, ensuring all information was accurate and prepared for comprehensive analysis. For the facilities assessment, we conducted a capacity review to uncover opportunities for improving utilization and to determine whether the closing distribution center’s workload could be absorbed by other sites. This included a fit/gap analysis, identifying how the remaining facilities could maintain operational efficiency while taking on additional volume. 

In the network optimization phase, we collaborated with the client through a series of workshops to develop and refine multiple alternatives. We applied sensitivity testing to key variables, such as location strategy, inventory levels, and operational costs, exploring more than eight scenarios. These scenarios included adding an east coast cross-dock and relocating the west coast node to optimize last-mile delivery efficiency. 

The final outcome was a comprehensive business case and a clear implementation roadmap, offering step-by-step guidance for short-, medium-, and long-term success. This provided the client with actionable milestones and a defined path forward, enabling them to execute the strategy with confidence and precision.

From start to finish, this project was built on close collaboration. Through hands-on workshops, data validation, and strategic alignment with the client’s goals, we ensured that every phase of the project delivered lasting value. 

The “sweat the asset” strategy we recommended allowed the client to extend the operational life of their existing distribution centers in the Greater Toronto Area, avoiding the steep costs of relocation while reducing operational expenses by 20%. Merging two sites unlocked further savings, while the network optimization plan, which included opening a new east coast cross-dock, drove additional efficiencies. By consolidating e-commerce volume into fewer retail locations, the redesigned network improved operational flow, doubled fulfillment capacity, and raised service levels from 72% to 93%.

Ultimately, the combined facility improvements and network enhancements revealed a projected $25.7 million in savings. Beyond cost efficiencies, this solution equipped the client with a future-ready distribution network—one capable of evolving with market demands and setting them up for long-term success.