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A Benefit of Supply Chain Network Design and Analysis to Consider

Jill Hays, Senior Supply Chain Consultant  :  28 July 2010 / 10:25 AM  :  0

The complexity of a network design and optimization study significantly increases when components such as multinational business units and third-party logistics/services are added.  But then, so do the opportunities for increasing operational efficiencies and gaining a more in-depth knowledge and understanding of the respective supply chain.

One often overlooked, often intangible benefit of completing a Supply Chain Network Analysis Project is the key learning's.   The data collection and project development process are great opportunities for organizations to collaborate and learn. 

Take for example, a project where a major corporation’s existing supply chain network evolved over the last several decades, with the last major change made in the 1990's.  It is in short, a legacy network with all the commonly associated benefits and pitfalls.  The catalyst for the study is the sudden closure of one the distribution facilities, due to catastrophic weather.  Several options for a future supply chain infrastructure could be considered.  During the study, several sub-projects, including a truckload utilization study were undertaken based on key learnings and findings exposed during the data collection and analysis stage of the study.

The data collection and analysis portion of any major supply chain optimization project is extensive and intensive, providing rich opportunities for collaboration and learning in organizations that may have previously made decisions in a more suboptimal fashion.  As the organization gains visibility and education into the total supply chain; potential operational subprojects such as improvement in truck utilization, inventory investment, sourcing decisions, and/or other cost savings initiatives that were not previously visible become rich areas for harvesting cost savings.  These initiatives could not only provide operationally efficiency within the supply chain, but also impact the overall study and design of the network.  For example, a 5% reduction in the overall transportation costs could influence the number and size of distribution facilities in the network.

Change is constantly occurring in any supply chain.  And let's face it, organizations often make decisions within functional silos that potentially sub-optimize the entire supply chain.  A Supply Chain Network Analysis is an excellent way to understand which changes will have the most positive holistic impact, and how and to what degree those changes maximize profits, thus optimizing the supply chain as a whole.

Posted in Supply Chain on 28 July 2010
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Tagged: Business Impact Analysis  Business Modeling  Business Value  CPG  Retail  Supply Chain  

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