Infographics

Where the stock sits: how a distribution strategy is built

Distribution takes about a sixth of the retail price, and four fifths of that is settled before a single truck moves. What goes into a distribution model, and why the obvious answer is usually the expensive one.

13. september 2026

3 min

Unfolded map of Central Europe with coloured pins on a wooden table

Distribution takes about a sixth of the retail price of a product, and four fifths of that is settled by decisions made long before daily operations start. Where the warehouses sit, how the regions are split and how often you deliver — that is the part worth modeling.

The share: 17% of the retail price

About 17% of the retail price goes on distribution, from plant to customer. Of that cost, 80% is fixed by strategy rather than by daily operations.

Put another way: by the time a dispatcher is planning tomorrow’s routes, most of the bill has already been written. Route optimization matters, but it is working on the fifth of the cost that is still open.

Eleven inputs, one answer

How much we deliver, how often, how many warehouses we run, what we drive and how far, and how many people it takes. On top of that: motorways still under construction, route planning down to the turn‑offs, how the product is packed, land prices, and contractual penalties.

All of it goes into a simulation model that generates several scenarios rather than one number. The scenarios differ in warehouse count, location and regional split, and each one carries its own cost and service profile.

The quick‑win trap

Most customers are in Prague, so the warehouse should be in Prague. It is the first thing everyone says, and the model regularly disagrees — it often points somewhere like Poděbrady instead.

Concentration of customers is one input among eleven, not the answer. The answer that sounds obvious is usually the one that costs most.

The best model is not the plan

The mathematically best network is often hard to implement and rough on the people at the end of the chain. What gets built is a compromise between it and the client’s constraints: the cash available for investment, the direction the company is heading, and what its customers will accept.

The output is a set of decisions rather than a single figure: where the warehouses go, how the regions are split, the route plan down to the turn‑offs, what gets automated, and the delivery schedule.

What to take from it

Distribution is about 17% of the retail price.
Four fifths of that is decided by strategy, not by daily operations.
A distribution model takes eleven inputs, from delivery frequency to contractual penalties.
The output is a set of scenarios, and the one that gets built is always a compromise.

The model gives you the answer that is best on paper. Our job is to find the one the client can actually run — and those two are rarely the same place on the map.

Martin Šereda, Senior Consultant, Logio