Supply chain network design is the process of modeling a supply chain to better understand the costs
and time associated with bringing goods and services to market. By optimizing the supply chain network,
organizations can ensure that they are using the best procurement and manufacturing methods, modes
of transportation, the best routes, and the right blend of intermediate assets to meet business goals.
In today’s economy, having an optimized supply chain network design is critical for success. Global
material shortages, capacity constraints, and lead time growth have increased the difficulty of managing
business. By optimizing network design, organizations can achieve improved speed to market, improved
service levels and can generate cost-reduction opportunities through improved procurement,
operations and distribution. Improved collaboration among suppliers, distributors, and logistics partners
will also enhance supply chain efficiency while reducing general business risk.
Given recent global events, it’s become clear that organizations need to build resilient supply chains that
are both efficient and responsive. Network design is a continuous improvement process – nothing
within the industry remains stagnant, and it is therefore imperative to remain agile and to continuously
adapt to the changing business environment.
So, how does it work? There are five primary phases for designing a supply chain network that better
meets business objectives.
The most important steps in designing a supply chain network is to
define your primary objectives. Consider desired customer service levels, cost objectives, and
any current pain points that are hindering your business.
Define Business Objectives
Successful business leaders use data to make informed, intelligent decisions. It is
important to leverage all available data to help make decisions. During this phase organizations
will evaluate data such as demand by product, capacity, transportation rates, and associated
Prior to making any changes to your existing supply chain network, it
is important to model your current supply chain. It is important to select software that can
represent your unique business and supply chain network. Typical model components include
capacity limitations, customer service requirements, lead times by mode, operating capabilities
and the associated cost and performance of each different scenario.
During this phase organizations will use supply chain
optimization tools to evaluate all the different “what if” scenarios. At this phase it is important
to leverage both people who understand the current state of the business, as well as
practitioners who understand the limitations of simulation technology. By doing so you can
identify any external factors or constraints that may not be contained within the model.
Model Alternate Network Solutions
The supply chain network analysis and design process
must be continuous. We recommend that this process be revisited by a cross functional team
with a regular cadence (quarterly, annually, etc.) as well as when any major business or market
Implement and Continuously Refine
In addition to the five-step process highlighted above, it is important to deploy benchmarking
tools and success metrics to understand what changes are working well and what changes need
to be refined.
At Axidio, We help organizations navigate the supply chain network design process to achieve
optimal results. By partnering with Axidio, organizations can benefit from expert advice,
customized solutions, and advanced technologies that enable optimized supply management.
Connect with Axidio today and prepare for the challenges of tomorrow.
Get in Touch
We apply our proprietary technology and domain expertise to provide you with the visibility to know and the insights to act.
Connect With Our Practitioners