Is Your Supply Chain Design Broken?
Working at LeanLogistics I get exposure to a wide variety of customers each with their own stories of how they have grown their businesses. Some have grown organically over the years adding new sales territories over time. Some have purchased other businesses or been acquired by other companies.
When I ask questions about network modeling nearly every company agrees it’s a good idea and would likely create a competitive advantage. Most of them also haven’t done any type of network analysis. When asked why this is the case typical responses include:
- “Network modeling is for large companies.”
- “We don’t have the data to support those types of studies.”
- “We know how to design and bring products to the market, not design a network.”
- “It’s too expensive and time consuming.”
If you had asked me five years ago I would have agreed with most of those points. However, with the rise of SaaS and best of breed technology solutions, data availability is less of an issue than it has been historically. The marketplace for network design technology has also evolved substantially. So much that you can do studies of low to moderate complexity in weeks rather than months. This also translates into price points that are attractive for businesses of almost any size.
One of the best reasons to evaluate your supply chain design is quite simple: you don’t know if it’s broken until you take a closer look. Supply chains are a collection of historical decisions made over the years given the best data and assumptions available at that time. Viewed independently each of those decisions were reasonable, but as time progresses assumptions are no longer valid as products and customers are added and removed. If the flows and costing of your network haven’t been purposefully designed and optimized to fit your current business model and customer demand, there likely exists opportunity to improve cost and/or service to better serve your customers and shareholders. Once you’ve quantified your current state you can begin to evaluate how specific flows and decisions within the supply chain effect your total cost.
So what should you do if you think your supply chain design is broken?
The best advice I can offer to anyone looking at network design is to start small but dream big. Too often companies want to model every detail on the first try. The project timeline slips, people lose interest and become disenchanted. Starting small, achieving success and learning from the pilot project is a path to success for the next model with greater complexity. If your company isn’t planning on developing and maintaining network design as a core competency make sure to partner with someone that can help you reach your vision at your pace. Be sure to add in a plan for the future of your business as well. Network design shouldn’t be a standalone project but rather a continual process that strives to balance cost and service as business requirements change.
Tagged LeanLogistics, network design, optimization, Supply Chain, supply chain design, Transportation, transportation management