| Today's erratic economic conditions and incredible | | | | - Phase 3 Develop an implementation plan |
| supply chain dynamics are causing manufacturing and | | | | In Phase 1 of network modeling it is essential to gain |
| distribution companies to increasingly turn to network | | | | a thorough understanding of your company's overall |
| design as a strategic solution to help them satisfy | | | | business requirements. Durring this phase, the project |
| customer demand, improve overall corporate | | | | team commences with gathering, cleaning and |
| performance and remain relevant in the global | | | | validating operational and costs data on the current |
| marketplace. Being faced with continuous challenge to | | | | network. These baseline service levels and costs will |
| compete in today's marketplace, companies can't | | | | be used as the benchmark against which all other |
| afford not to explore the potential of network | | | | options will be compared. |
| design and optimisation. | | | | Phase 2 focuses on identifying the potential scenarios |
| Designing a supply chain network is a process of | | | | to model and conducting first level scenario analysis. |
| evaluating alternative strategies and selecting the one | | | | In this phase it is also critical to clearly articulate the |
| that maximizes profitability and helps improve | | | | key constraints and key factors to be modeled in |
| performance at each link in the chain. If delivered | | | | each scenario. High-level models are built to test the |
| successfully, a network re-design and optimisation | | | | potential "what ifs" and calculate the appropriate cost |
| project promises to drastically improve a company's | | | | and service levels. Each scenario is tested for |
| chain performance in a variety of areas, such as | | | | 'robustness' and in so doing, serves to verify and |
| transportation costs, inventory levels, etc. | | | | validate the network model. Models are often |
| The optimisation process is done through network | | | | estimated at the SKU level, with multiple time periods, |
| design modeling, which provides powerful decision | | | | and the entire end-to-end chains are evaluated. |
| support functionality to understand complex supply | | | | It is important to note that the more precise a model |
| chain relationships. | | | | must be, the greater the amount of data that must |
| Typical Network Design Problems | | | | be collected, the greater the accuracy required of |
| Does your supply chain network optimally support | | | | that data and the more challenging it may be to |
| the business model and objectives? If you hesitate | | | | solve the model. Every effort should be made to |
| to answer this question, you might want to consider | | | | create reusable models that may be re-applied for |
| network re-design and optimisation as a way to | | | | future studies. |
| tackle the most challenging supply chain dilemmas | | | | Phase 3 in network modeling is the final selection and |
| your organization may face. | | | | justification of the selected network. The results |
| Network design problems are concerned with | | | | must now be compared with the baseline in order to |
| determining logistics infrastructure over a multi-year | | | | build the business case for change. This includes |
| strategic planning horizon. The strategic decisions may | | | | defining specific operating procedures, material flow |
| include location and capacity of facilities and | | | | policies, inventory policies and load plans. We work |
| warehouses along with the sourcing allocations | | | | together with each client to help develop a road map |
| between them and customers. The objective is to | | | | of how to change from the existing network to the |
| provide the most effective solution so as to minimise | | | | desired future state and properly determine the |
| total costs while providing customers with the highest | | | | one-time costs. |
| possible level of service. | | | | Supply Chain Network Design Software and Tools |
| By applying advanced mathematical technology, | | | | The network design software and tools seek to |
| network design and optimisation can also help | | | | optimise performance across an entire network. |
| companies determine optimal answers to various | | | | These tools help companies identify tradeoffs among |
| types of questions from the most strategic in nature | | | | cost, service and the amount of capital required to |
| to the most tactical. | | | | support the most efficient network. |
| Optimisation opportunities occur at every stage along | | | | The range of tools used to create a network model |
| the supply chain. The extent of a particular re-design | | | | can vary dramatically in complexity and detail. Simple |
| effort depends on business considerations and the | | | | modeling problems can be solved using Microsoft |
| need to balance effort versus value returned. | | | | Excel and Access based models. More complex |
| Could Network Design & Optimisation Help Your | | | | problems may require a combination of linear |
| Business? | | | | programming and mixed integer linear programming |
| Companies can save millions of dollars and significantly | | | | models. |
| improve their supply chain performance by applying | | | | Depending on an organisation's needs, either cost |
| network design modeling and expert consultant | | | | calculators or advanced supply chain network design |
| services. Supply chain efficiency has a fundamental | | | | software tools can be used. Larger organisations (and |
| impact on the bottom line of both income | | | | more complex supply chain problems) may justify |
| statements and balance sheets of organizations. | | | | investment in advanced network design software |
| The nature of network optimisation allows for an | | | | tools to address specific business challenges on their |
| initial assessment of potential benefits before a | | | | own timelines. The advantage of these software |
| large-scale project is started. The objective for | | | | tools is that the modeling constructs are often very |
| companies would be to embed the optimisation | | | | similar to the modeling used for day-to-day supply |
| results into the day-to-day operations, creating a | | | | chain planning activities. These sophisticated network |
| sustainable competitive advantage. | | | | modeling tools can also enable a company to increase |
| Supply chain network design projects are usually | | | | its market share by leveraging the lower costs of an |
| accomplished in a matter of weeks and the payback | | | | optimised chain. |
| is often realised within the first few months of | | | | For many companies who may have no need to |
| implementation. Companies that focus on their supply | | | | review their networks frequently or merely want to |
| chain network are often rewarded with a cost | | | | quickly test a number of distribution network options |
| efficient and customer-responsive supply chain. | | | | at a high level may want to rent the software and |
| Typical Supply Chain Network Modeling Approach | | | | have a qualified consultant team run the network |
| Network modeling is a powerful tool to improve | | | | modeling tool. Choosing a skilled team responsible for |
| overall supply chain performance. A network | | | | development of meaningful supply chain model and |
| optimisation process usually involves modeling a | | | | conversion of its output into a strategic plan is equally |
| subset of a company's products across the supply | | | | important as selecting the optimal network modeling |
| chain to determine the inventory and customer | | | | software for your company. |
| service improvements that network design and | | | | Effective strategy development requires a blend of |
| optimisation will provide. | | | | "art" and "science." "Art" is necessary for evaluating |
| Whether your company is looking to reduce costs, | | | | supply chain trends and prospects and designing a |
| improve customer service, or be positioned for | | | | sustainable network structure. "Science" is applied in |
| future growth, network optimisation and modeling | | | | the effective use of network modeling tools to |
| helps develop the implementation plans required to | | | | create and evaluate potential logistics strategies. |
| translate strategic decisions into reality. A typical | | | | A highly trained consultant team experienced in the |
| approach for modeling the supply chain network | | | | use of advanced network design software and able |
| generally involves the following phases: | | | | to research potential strategies and analyse the |
| - Phase 1 Gather data and establish current cost and | | | | operational impacts of various decisions plays a critical |
| service baseline | | | | role in the success of any supply chain restructuring |
| - Phase 2 Determine logistics scenarios | | | | process. |