Distribution Challenges: Accepted

09/13/2022

2021 was a record year for U.S. distributors. Despite facing workforce, supply chain and continued pandemic challenges, the fact remains that consumer demand is outpacing the speed at which manufacturers can distribute product. Couple this with pressures to focus on domestic supply, manufacturers and distributors are searching for ways to quickly get to market.

The U.S. wholesale distribution sector revenues rose 22% in 2021.  And the economy doesn’t show signs of changing its trajectory, at least in this aspect of industry.  Several factors are important to consider when tackling distribution in your business.   

We spoke with one manufacturer in South Western Kentucky that located in Hopkinsville, Kentucky just because of proximity to their business customer.  “The adage that location is everything is still very true for manufacturing.  Our company is always looking to control costs and transportation, shipping, and logistics costs are big items.  We chose this region precisely because we can save so much money being so close to our various automotive assembly customers,” said Brad Graves, General Manager, Martinrea.  Martinrea located in South Western Kentucky to mitigate such costs and now is less than 250 miles from their customers and has access to 86% of the United States within a day’s drive of their location.  Paired with varied access routes – interstates, rail, and a nearby international airport, their location plays a large part in driving down costs of manufacturing and distribution.  

A factor coming in to play with businesses today is the ever-increasing consumer demand for product – and fast. WalMart Distribution Center relies on its interstate-adjacent location and regional workforce.  This allows them get product to their stores and end-users efficiently and affordably. 

And its components that go inside the packaging? Those are also nearby. The Hopkinsville-based distribution center utilizes a local advanced manufacturer’s, Hopkinsville-based Pregis, air pillows in much of their packaging. Not only is this component convenience, it’s a cost-saving measure as well. 

Novelis, a manufacturer of aluminum for various applications including aerospace and automotive, chose their Guthrie location for their original investment of over $350M as well as their recently announced $350M expansion precisely because of these unique and unmatched advantages provided by South Western Kentucky.  As Plant Manager Tom Lilienthal recently shared, “Our company is proud to have a growing family and home in Todd County and South Western Kentucky.  The obvious business advantages continue to provide Novelis with an awesome location for growth.  But, it’s the small-town charm and family atmosphere that we really love.”

It’s important that distribution factors in proximity to markets, suppliers, cost of living and low taxes, and a strong regional workforce.