What is Supply Chain Network Optimization?

According to the great management consultant Peter Drucker, “Knowledge has to be improved, challenged and increased constantly, or it vanishes.” In reference to a supply chain, without constant study, a company can lose sight of how its supply chain impacts the entire business.

To meet this ever-growing need for current understanding of the supply chain, more companies are performing supply chain network studies. Supply chain network optimization is the science – and art – of designing a holistic, strategic and quantitative view of an organization’s end-to-end supply chain.

How can a supply chain network optimization help your company?

By conducting a thorough analysis of their network, companies will be armed with the necessary quantitative metrics to make informed, strategic decisions regarding:

  • Plant locations and capacity
  • Distribution locations and sizes
  • Possible pricing levels

What drives the need for a supply chain network optimization?

To stay ahead of the competition and maintain operations at maximum profitability and productivity, companies need to examine how their supply chain will handle change. A wide array of activities can cause significant changes to the supply chain, including:

  • Strategic planning
  • Growth
  • Changing customer base
  • Divestment
  • Expansion
  • New product lines
  • Sourcing
  • Acquisitions
  • Consolidation
  • Carbon footprint reduction
  • New markets
  • Inventory
  • Mergers
  • Deconsolidation

A supply chain network optimization empowers companies to compare the current state of their supply chains to multiple “what-if” scenarios. They can then develop concise, strategic plans and goals based on sound metrics. The end in mind of a supply chain optimization is to provide results that enable companies to move forward in a secure manner.

When considering a Supply Chain Network Optimization project, assess your comfort level with your knowledge about your company’s current network, and what you will need to know – going forward – to make highly confident decisions. Many components of a supply chain network may seem intuitive at the micro level, but when considered as a part of the whole, those pieces may not be the ones driving the overall direction and costs. Only by conducting a Supply Chain Network Optimization project will those individual mechanisms, their links and influences be measured and understood collectively.

Transportation Insight’s Supply Chain Analytics group conducts supply chain network optimizations for its clients by coupling deep data analysis with its Extended LEAN® methodology of continuous improvement across the end-to-end supply chain. Our flexibility and expertise enables us to focus on a variety of scenarios that an organization may want to explore. We then deliver those results and the client decides on a “right fit” for its organization as a whole. We can also continue with timely engagements to ensure the network model remains up to date, acting not only as a company’s logistics provider, but also as its long-term strategic growth partner.

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