Guest Author: Seth Burkhart
Having an efficient supply chain is no longer enough to gain a competitive edge in your market. In the last decade, the companies that have excelled in reliability, resilience and profitability are going deeper by building strategic alignment across three foundational areas: supply network design, supply chain planning and inventory strategy.
These three disciplines are interconnected levers. When harmonized, they amplify operational performance and customer satisfaction. When misaligned, they become costly silos.
Here’s how they correlate and why getting them right is critical:
Supply Network Design: Your Strategic Infrastructure
Your supply network is the backbone of your business. It includes suppliers, manufacturing sites, distribution centers and transportation lanes. Whether you’re sourcing globally, nearshoring or building redundancy, decisions in your network determine lead times, risk exposure, landed costs and inventory positioning.
Here’s the catch: network design decisions constrain your inventory planning and stocking options. If you centralize production in Asia, but your customers need next-day delivery in the U.S., you’ve already introduced tension between customer service and working capital — either you don’t deliver on the customer expectation of next-day delivery, or you drain your bottom line paying costly expedited overseas shipping fees
A good network strategy that can handle complexities and adapt to changes doesn’t live on PowerPoint — it’s modeled with advanced technology in conjunction with planning and inventory assumptions.
Supply Chain Planning: The Synchronizer of Supply and Demand
Once your network is in place, the real-time challenge becomes how to orchestrate it. This is where supply chain planning comes in. Supply chain planning is the ongoing process of forecasting demand, allocating supply and aligning production and procurement activities throughout your network.
Supply Chain planning isn’t just about creating a schedule; it’s about balancing trade-offs in three areas:
- Inventory vs. service levels
- Capacity vs. flexibility
- Forecast accuracy vs. agility
It is only possible to balance these three areas when planning models are aware of the actual network configuration and the true cost-to-serve across different nodes. You can’t create a good plan if you don’t know how inventory flows or where bottlenecks occur.
Inventory Strategy: The Shock Absorber Between Supply and Demand
Inventory sits at the intersection of network and planning. It creates a buffer against supply and demand variability, but it also ties up capital. A strong inventory strategy answers questions like:
- Where should we hold safety stock?
- How should we segment inventory: by product or by customer?
- What should we make to stock vs. make to order?
Here’s where the correlation between your supply chain network and planning engine and your inventory is crucial:
- If your network is slow or inflexible, you’ll need higher inventory levels.
- If your planning is inaccurate, safety stock will rise to cover the gap.
If your inventory targets are not aligned to supply and demand, your network may appear unreliable despite good planning processes.
In other words, inventory is the scoreboard — it reflects the quality of your network and planning decisions.
The Importance of Alignment Across Network, Planning and Inventory
When these three areas operate in harmony:
- Customers get what they want, when they want it
- Working capital is optimized, not bloated
- Operations become proactive, not reactive
But when they’re siloed:
- Planners chase demand with no insight into supplier constraints
- Inventory builds up in the wrong places
- Service levels suffer despite expensive safety stock
A holistic supply chain strategy starts with recognizing the interdependence between your physical network, your decision-making processes and your inventory policies.
Connect the Dots Before You Optimize
Even as emerging technologies and trends continue to flood the industry, supply chain leaders could benefit from keeping a ‘less is more’ mentality in their organizations. Before investing in new tools or chasing the next efficiency KPI, take a step back and ask, “Are my network, planning and inventory strategies designed in concert, or in conflict with each other?”
Because in the supply chain, alignment isn’t just nice to have; it’s a competitive advantage.
enVista’s Supply Chain Strategy Experts Can Help
Our consultants have worked with hundreds of the leading manufacturers, distributors and omnichannel retailers to build and optimize supply chains that are a competitive advantage rather than a cost center.
We can partner with you on an end-to-end supply chain network design that aligns network, planning and inventory to help you exceed your customer service levels at the best cost with the most return on investment.
Ready to learn more? Let’s have a conversation.®
