Mindmap for Supply Chain Network Redesign
Iterative network design and planning is essential for companies to be successful in serving costumers efficiently, consolidating new assets, or expanding into new markets or products. Fact-based analysis helps them to increase market share, reduce costs and meet stringent customer demands via increasingly complex channels. Supply Chain Movement and consulting, analytics and market intelligence firm Chainalytics have therefore developed this mindmap for Supply Chain Network Redesign, outlining the route to success and providing road signs to flag potential hazards along the way.
Main external factors
Companies are under constant pressure to increase market share, reduce costs and meet stringent customer demands via increasingly complex channels. Furthermore, fluctuating currencies, fuel and real estate costs and rising labor costs all impact supply chain operations, forcing constant adaptation to achieve the most cost-effective route to market. Additional pressures from supply chain risk (geopolitical, environmental); ongoing changes to tax and environmental regulations; and technological trends like driverless trucks and lights-out warehouses make iterative network design and planning imperative for success: diagnose.
Benefits of network design
Network design relies on rigorous data collection, modelling, and analysis for in-depth insights into network cost and service trade-offs. Considering several what-if scenarios allows identifying operating cost savings usually within 5-15% of the total while maintaining similar to current service levels or improving on service levels at marginal cost increase. Network design supports the definition of the manufacturing and/ or distribution footprints along with definition of facility roles and sizes for better business and supply chain planning: plan.
Challenges, methodology, and key success factor
Successful supply chain network design relies on data quality and organizational buy-in to ensure changes recommended are implemented. Executive support for network design ensures broad organizational alignment, guidance and direction as well as human and financial resource allocation. The process includes analysis both current state analysis (network flows, capacities, service levels, throughput and inventory levels, product portfolio, operating model and cost-to-serve) and what-if analysis (current constraints, future customer demand, greenfield options, supply chain disruptions and new business strategies): execute.
Execution benefits and monitoring
Network design enables effective organizational (re)alignment of assets, systems, processes and people, including systems integration and infrastructure changes (3PL hiring, warehouse design, transportation bidding, etc.). To ensure a continuous improvement loop in supply chain and business practices and strategies, companies must subsequently monitor not only changing external factors -like government rules, markets, technologies, competitor behaviour and sourcing options – but internal factors like service levels; manufacturing, warehousing (fixed and variable), inbound/outbound freight and inventory carrying costs; bottlenecks or slack; asset utilization; and shipment frequencies/volume/size: review.