Puerto Rico Cinder Block Supply Chain Optimization
Strategic analysis of warehouse location expansion for cinder block distribution across Puerto Rico. This comprehensive study evaluates 24 candidate locations using NPV, IRR, and payback analysis, optimizes network design and inventory policies, and provides data-driven recommendations for supply chain expansion to meet growing demand while minimizing total landed costs.
Why This Analysis, Why Now
Tropix Strategic Operations was engaged to address a growing operational gap: demand for cinder blocks in Puerto Rico has steadily increased, yet the network design, shipment cadence, and inventory policies were built for a different demand shape. This mismatch was showing up as longer routes, inconsistent service levels, and rising total landed cost.
The client's leadership needed a decision-grade answer: if a new distribution point is warranted, where should it be, and how should the supporting network operate to deliver the best financial and service outcome? This analysis evaluates candidate locations, designs optimal flows between the plant and customers, sets inventory policies that hit target service levels, and quantifies the trade-offs between shipment frequency and transportation modes.
The goal is twofold: (1) produce a clear, financially justified recommendation for expansion and (2) establish a repeatable, data-driven framework the client can reuse as the market evolves.
- Location economics: Compare candidate sites via NPV, IRR, and payback period analysis.
- Network design: Allocate demand between facilities to minimize cost while maintaining service.
- Inventory policy: Set EOQ, safety stock, and reorder points for a 95%+ service target.
- Logistics cadence & mode: Optimize shipment frequency and TL vs. LTL selection.
- Resilience: Stress-test results via sensitivity and scenario analysis to inform risk-aware decisions.
Key Results
Based on comprehensive analysis of 24 potential warehouse locations across Puerto Rico, Carolina emerges as the optimal choice with an NPV of $362,638, IRR of 26.3%, and 3.4-year payback period. The analysis reveals that only 2 out of 24 locations are financially viable, with Trujillo Alto ($311,264 NPV) as the secondary option. Daily shipment frequency minimizes total logistics costs at $2,011/month, while the recommended inventory policy achieves optimal service levels.
Location Distribution & Network
Side-by-Side Analysis
Carolina Warehouse: Scenario Analysis & Risk Assessment
Explore how Carolina's warehouse location performs under different business scenarios and understand the sensitivity of key parameters on financial outcomes. This analysis is specifically based on Carolina's Metro region location with 788 pallets/month demand and $45/pallet profit margin. Note: Scenario NPVs include 5-year growth projections and inflation adjustments, while the executive summary shows static analysis NPVs.
Carolina Location: Tornado Chart Analysis
This tornado chart shows how changes in key parameters affect Carolina's warehouse Net Present Value (NPV). Parameters are ranked by their impact on project viability, helping identify the most critical assumptions for Carolina's Metro region location.
Carolina Location: Monte Carlo Simulation
Monte Carlo simulation evaluates Carolina's warehouse investment across 1,000 scenarios by varying demand (±20%), profit margins (±15%), rent costs (±10%), and transport expenses (±12.5%). Using Carolina's base parameters (788 pallets/month, $45/pallet, $42K rent, $205K transport) with 3% annual price growth and 2.5% cost inflation over 10 years, it provides confidence intervals and risk metrics for investment decision-making.
Cash Flow & ROI Analysis
Cash Flow Waterfall
ROI Comparison Matrix
Break-Even Analysis
Project Timeline & Milestones
Project Overview
Implementation Timeline
📅 Carolina Warehouse Implementation Phases
Site selection & lease negotiation
Milestone: Lease signed
Facility fit-out & equipment installation
Milestone: Facility ready
Staffing & training
Milestone: Team trained
Go-live & operations start
Milestone: Operations live
Performance monitoring & optimization
Milestone: KPI targets met
Expansion planning & implementation
Milestone: Expansion plan ready
Resource Allocation
👥 Team Structure Overview
5-person core team with overlapping responsibilities during peak implementation phases
Risk Mitigation
⚠️ Carolina Warehouse Risk Management
Key risks with mitigation strategies for Metro region warehouse implementation
Risk: Unfavorable lease terms or location unavailable
Mitigation: Pre-negotiate with 2 backup Metro locations (Trujillo Alto, Guaynabo), engage broker 6 months early
Monitor: Weekly negotiation updates
Risk: Metro region permits delayed beyond timeline
Mitigation: Engage legal counsel early, submit applications 4 months before go-live
Monitor: Bi-weekly permit status reviews
Risk: Fuel price fluctuations impact logistics costs
Mitigation: Lock fuel surcharge rates for 12 months, establish backup carriers
Monitor: Monthly transport cost analysis
Risk: Market changes affect Carolina's 788 pallets/month demand
Mitigation: Maintain 15% safety stock buffer, implement demand forecasting
Monitor: Weekly demand tracking
Risk: Difficulty recruiting qualified Metro region staff
Mitigation: Begin recruitment 4 months early, offer competitive packages
Monitor: Monthly recruitment progress
Carolina Warehouse Competitive Positioning
Analysis of Carolina's competitive position in the Metro region cinder block distribution market, including market share, service positioning, and strategic opportunities for the new warehouse location.
Market Share by Region
Competitive Positioning Matrix
Carolina Competitive Intelligence & Market Dynamics
Strategic competitive analysis based on Carolina's 10.5% market share and network optimization results. This analysis identifies specific threats, opportunities, and strategic actions for Carolina's warehouse investment.
🎯 Carolina's Strategic Position
10.5% market share with strong competitive position
Optimal allocation serves 788 pallets/month efficiently
$21.63/pallet transport cost vs industry average $25-30