SUPPLY CHAIN NETWORK DESIGN & OPTIMIZATION

Supply chain network optimization is the process of creating an overview of an organization’s supply chain. This process can take different forms, but it most often involves creating a model replica of the supply chain and visuals of all transactions within the supply chain. This model allows organizations to examine and evaluate different parts of supply chains with an end-to-end view. The information gleaned from this exercise can then be used to lower supply chain costs, create better demand forecasts and optimize processes across the supply chain. The supply chain optimization process can involve using anything from simple technology to advanced supply chain network software, depending on the organization and complexity of the supply chain being examined.

Supply chain network design is an analytical process that helps companies determine the optimal combination of suppliers, manufacturers, facilities and products using mathematical modeling. This process helps eliminate a lot of the issues that arise during the growth process of a typical organization.

The process starts with determining an organization’s main business goals, such as plans for expansion, specific financial goals, market sectors being targeted, etc. This information is used to identify specific factors that could help meet these goals, such as pricing, competition, customer service processes, etc.

This information is then used to optimize supply chain processes, which helps create an optimal balance between production, supply and distribution costs. The result is streamlined and efficient processes that drive company growth and lower overall operating costs.

Supply chain network optimization allows companies to step out of the mire of day-to-day operations and examine their end-to-end supply chain and processes from a more analytical perspective. This has many benefits, including:

Lowered Costs

The supply chain network optimization process looks at every step of an organization’s supply chain. This examination of each part of the process allows companies to find areas where they are wasting money. When these areas are addressed, overall cost of operations can be lowered quickly.

Less Resource Waste

Inefficient supply chain processes can lead to wasted resources, lowering profits. Figuring out where this is happening and implementing better procedures can help lower overall waste throughout an organization. This leads to less dead stock, excess raw materials, etc., saving organizations money throughout each part of the supply chain.

Improved Customer Satisfaction

A deep understanding of your company’s supply chain can help you figure out where you might need to be flexible. For example, you may realize that certain items are in high demand during certain parts of the year, so you need to order more raw materials before these booms in demand occur. This leads to products being well-stocked during times of high demand, which leads to your customers getting the products they want in a timely manner.

Every organization has a different level of supply chain complexity, so there is no one right answer to this question. Some signs that a supply chain network optimization could be needed are:

• An extended period has passed since an optimization was performed
• Product portfolios have changed
• Issues with inventory levels and costs
• New mergers and acquisitions

With increasingly competitive markets, supply chain optimization is critical. Many companies are now giving up on more tedious processes in favor of outsourcing supply chain network optimization to experts who use simulation software to prepare and populate models quickly.