Manufacturer of Heating & Air Conditioning Systems

Issue: Client wanted to consolidate warehousing and distribution into a single site and further to determine the feasibility of outsourcing the operation to a 3PL.

Solution: A cost model was built that reflected the capital investment expense required to establish a new DC location together with a forecast of operational costs to serve as a baseline for comparing costs to 3PL proposals.  A warehouse sizing exercise was conducted and based upon data analysis from several plants along with forecasted production including new product requirements it was determined that 1M sq. ft. was required. An RFP was created that contained historical data, systems requirements, planned inventory levels, customer service requirements and all other pertinent information needed for the 3PLs to submit a detailed bid.  A selection process was developed and certain criteria were selected to compare 3PLs qualitatively and quantitatively.

Results: As expected six proposals were received in response to the RFP. The selection process and criteria helped the client to narrow the field and after significant due diligence a 3PL was selected.  TSC assisted with final negotiations and drafted the 3PL contract in collaboration with its client and the 3PL.  Today, after many years this outsourcing is still considered to be a successful undertaking from a cost and service viewpoint.

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