At Bisham Consulting we undertake many supply chain network design studies every year. In this short article we highlight the benefits of these studies and detail the key aspects involved in taking a successful approach to these types of projects.
Adapting to Changing Business Needs
Business supply chains are continually changing; be it due to transformations in customer profile, evolving demand patterns, sourcing changes or relocation of manufacturing footprint. Hence, maintaining a fully optimised logistics network is a major challenge. An added difficulty is actually defining what optimisation for your business actually means. What is the right balance between operational costs, capital investment and service levels that maximises the overall business result, rather than just reducing logistics costs in isolation.
The Value of Supply Chain Network Design
Whatever market sector your business is in, and whatever the scope and profile of your supply chain, a network design review will often offer one of the best business returns from logistics initiatives. It is a powerful approach to creating a baseline model of your existing supply chain, (flows, costs, performance), which is calibrated to your business’s P+L accounts. From this foundation, modelling tools can be used to check the optimised locations of facilities and associated activities, streamlining existing flows, based on the use of
automated planning algorithms and changes to existing supply chain strategy and policy. To this, can be overlaid local issues relating to skills and labour availability, labour rates, property or land prices, cross border trade implications and tax regimes.
In essence, supply chain network design review outputs will tell you:
- How efficient the existing network is.
- How the existing network needs to change and how practically this can be delivered.
- What potential cost reduction/service level improvements are achievable.
Taking a Successful Approach
- Define clear scope, objectives and outputs before you start. These need to be consistent with the quality of supply chain data that is actually available to work with.
- Set your high-level strategy first – otherwise scope becomes too open. Restrict the number of scenarios modelled and work to an agreed and concise timescale.
- Consider the availability and accuracy of supply chain data. Is information up to date and reliable, or are data gaps likely to compromise the end result?
- Consider sensitivity analysis of outputs. This will ensure some degree of future-proofing can be considered
- Complete the project in a short timescale, maintaining project momentum throughout. Do not allow the project to drag on, as elongated timescales inevitably increase the risk that ongoing supply chain changes undermine the relevance of the final results.
- Conduct on a frequency appropriate to the rate of change in your business. You should also run a network design review when significant changes to the business occur. E.g. acquisition, new market entry, new product or new business strategy.
- Finally, there is a modelling data requirement, which nearly always represents the biggest project risk. Sufficient time needs to be taken prior to any modelling to ensure that the supply chain data is accurate and of sufficient granularity to meet the project objectives.
If you require any further information on Supply Chain Network Design please visit our services page or contact us for an informal discussion on 01628 487000 or email firstname.lastname@example.org