DC Bypass: Reduced Costs & Transit Times, But Not for Everyone

Eliminating a distribution center stopover can yield significant benefits, but it's not a viable option for every business, warns whitepaper from Purolator USA

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Jericho, NY — September 8, 2010 — Businesses that are able to eliminate a distribution center stopover from their supply chain can achieve significant benefits, but employing a DC bypass strategy is not a suitable option for every supply chain, according to a new whitepaper from Purolator USA.

Distribution center bypass (DC bypass) has become a preferred logistics solution for many businesses, since it generally allows a shipment to travel directly to its end destination without having to make a stopover that can add hundreds of miles to a distribution route, according to the whitepaper, "DC Bypass Offers Shortened Transit Times and Reduced Costs: But It's Not for Everyone."

DC bypass is especially appealing to manufacturers of seasonal merchandise, "hot" selling items and for businesses that prefer to maintain reduced inventory levels. As the title of the whitepaper suggests, the reported benefits of this strategy include reduced freight costs, shortened transit times and improved visibility.

"Under the right circumstances, a DC bypass solution can eliminate as many as seven to 14 days from a traditional supply chain," said John Costanzo, Purolator USA president. "A shorter transit time means that shipments can reach the store shelves faster, which can be a real competitive advantage, especially for makers of seasonal items and perishable goods."

Costanzo added DC bypass can be an attractive option for U.S. and Canadian businesses that have high volumes of cross border traffic. "DC bypass can eliminate the need for a business to operate a distribution center across the border," he noted.

Despite the many advantages of bypassing a distribution center, the white paper points out that DC bypass is not a viable option for every business. For one thing, a business must be able to pinpoint a shipment's ultimate destination at the manufacturing site. This is because all shipment preparation — packing, labeling, RFID tagging — is pushed up the supply chain. If a business is unable to forecast inventory demands, then DC bypass may not be a suitable option.

Businesses considering a DC bypass solution also need to be confident that they have sufficient inventory levels to accommodate various snafus that may arise. Excess inventory needs to be available to address inevitable problems that occur, including breakage, wrong sizes/colors or errors in model numbers. For most retailers, running out of stock and disappointing customers would wipe out any benefit derived from DC bypass.

Purolator's white paper also makes clear that not every logistics provider has the capacity to offer the DC bypass option. This is especially true for shipments traveling between the U.S. and Canada. A viable logistics provider must have extensive distribution networks throughout both countries, and must also have experience and expertise with the border clearance process.

The whitepaper is available for download (registration required) here.