Supply Chain Network Design

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.

Define 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.

Obtain Data

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 inventory costs.

Model the "As-Is" State

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.

Model Alternate Network Solutions

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.

Implement and Continuously Refine

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 changes occur.

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.

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