Distribution networks are rarely designed. They accumulate. A warehouse was added when a big customer arrived, a third-party site was taken on during a capacity crunch, and a regional depot exists because someone had space five years ago. Each decision was sensible; the aggregate is rarely what anyone would have chosen deliberately.
Start With the Demand Map
Before considering locations, plot where demand actually is — by volume, by weight or cubic measure, and by required delivery speed. These three maps often look different, and the differences matter.
A region with high unit volume but low weight has different logistics economics from one with fewer, heavier shipments. A region where customers expect next-day service constrains your options differently from one where a week is acceptable.
Then plot expected demand three to five years out. Networks are semi-permanent, and designing for today’s map on a growing product line means redesigning shortly afterward.
How Many Locations
The trade-off is consistent. More locations mean shorter delivery distances, faster service, and lower outbound freight per unit. They also mean more inventory in total, more fixed cost, more handling, and more complexity.
Inventory is the term that grows fastest. Because safety stock at each location has to cover local variability independently, total network stock rises with the number of stocking points — and the increase is steeper than most people assume before they calculate it.
So the question is where the curve turns: at what point does the freight and service benefit of another location stop covering the inventory and fixed cost it adds. That’s a calculation, and it’s worth doing properly rather than by instinct.
Not Every Location Needs to Hold Everything
This is the design decision that most improves the economics and gets skipped most often.
Stock the fast-moving minority of your range at every location and hold the tail centrally. The fast movers give you the service benefit where it’s visible, and the tail avoids multiplying slow inventory across sites where it will age.
For a growing product line this matters more each year, because new products lengthen the tail faster than they add volume.
Design For Change
A growing business will outgrow whatever you build. Favour arrangements you can adjust: leased space over owned, third-party capacity over fixed facilities in uncertain regions, and contracts with exit terms that don’t punish you for growing differently than expected.
The cost premium on flexibility is real and usually smaller than the cost of being locked into the wrong footprint for a decade. It also preserves the option to consolidate later, which growing businesses frequently need once the initial expansion settles.
Review on a Trigger, Not a Calendar
Set thresholds that prompt a review — a region exceeding a volume level, a service metric falling below target, freight cost per unit rising past a point. Networks drift into inefficiency slowly and nobody notices, because each individual month looks like the one before.
ticktick.ai models network configurations against demand by region and product, including the inventory effect of adding or removing stocking points.
