There are hundreds or thousands of “what-if” questions for businesses to answer in order to build a sustainable, efficient, responsive supply chain. The data required to answer them is in numerous software applications and can take months to gather and cleanse. Spreadsheet-based optimizations lack the enterprise-wide visibility needed to make large scale strategic improvements, and “best guess” strategies can lead to millions in wasted expense.
Supply chain modeling is a must-have capability for businesses to continuously optimize their supply chain operations and adapt to ever-changing market conditions by enabling credible, data-backed answers to tough what-if questions. But a sustainable and impactful supply chain modeling platform is more than just great technology. Let’s analyze the components that make up a smart supply chain modeling platform to drive significant improvements in cost, service and risk.
Four Components of a Smart Supply Chain Modeling Platform
1. A Unified Optimization and Simulation Engine
Having the power to generate and solve what-if scenarios quickly and easily has changed the way businesses look at supply chain design. Rather than evaluating individual solutions, businesses can now evaluate ranges of options and test them under real-world variability for better decision making. An all-in-one design engine with multiple integrated solvers can perform network, product flow, cost-to-serve, inventory, production and transportation optimization as well as greenfield and demand analysis in a single user interface and data model. Integrated simulation enables businesses to predict future supply chain performance.
2. Automated Model Building for Simplified Data Analytics and Documentation
The volume of data required to model the complex supply chains of large corporations is staggering. The final analysis is only as good as the data put in, so make sure your modeling data is accurate and complete. Look for a vendor that offers reference and benchmarking data you may lack, such as transport costs, facility costs, and transit time estimates. This can speed the modeling process and improve the accuracy of results.
By extending models to the cloud, businesses can expand the influence and relevance of design by more rapidly executing large, impactful projects; sharing collaborative models with stakeholders across the organization and centralizing all modeling data and analysis to enable continuous supply chain improvement and innovation. Cloud-based modeling enables greater collaboration between the team, centralized knowledge and data, extended scalability, and mobility to access data on-the-go.
3. A Shared Service Center/Center of Excellence (COE) for Supply Chain Design
Supply chain design should be able to see across the entire business to optimize the true end-to-end supply chain and not just a specific business unit or business function. Shared service centers, or supply chain design centers of excellence, can pool talent and technology to provide analysis capabilities to the entire organization. This organizational structure can help the group avoid the pitfalls of local bias or politics and remain focused on data-driven business solutions.
Even though supply chain design can identify major breakthroughs in cost savings or service, some recommendations can be disruptive and time-consuming to implement so many companies will first identify quick-win projects that are much easier to implement and still deliver significant cost benefits (e.g., product flow-path, inventory right-sizing, DC-to-customer assignments) to get started. Quick multi-million dollar wins can gain executive attention and establish early credibility for the supply chain designers, and are often used to justify further investment in staff and technology.
4. Support and Guidance from the Supply Chain Design Community
Businesses frequently want to do their own modeling, but they need guidance to be fully successful. Consider project coaching performed by modeling experts experienced in delivery approach, data analysis and technical guidance that goes well beyond standard technical support. Effective coaching can help guide companies along their journey of building and sustaining a supply chain design team and assist them in establishing their strategic project roadmap, as well as educate them in how best to use the modeling software.
Supply chain design is now a must-have capability for businesses to keep up with the pace of change and sustain a competitive advantage. Leading businesses have established centers of excellence and put in place an integrated supply chain design platform and business processes to rapidly and accurately answer tough supply chain what-if questions and generate effective and clear recommendations.
Toby is the co-founder and executive vice president of LLamasoft, leading the global sales, marketing and business development teams. Over the last decade, he has helped bring supply chain design into the corporate mainstream as a key business process and competitive weapon. Toby is a frequent presenter and panelist at supply chain and logistics leadership forums, has been named a ‘Pro to Know’ and has authored dozens of articles on the growing importance of supply chain design as a key competitive weapon. Toby has over 20 years of experience in building and growing technology businesses, primarily focused on process improvement and analytics. His expertise has been used to launch new technologies into mainstream use at global Fortune 500 businesses. He is a graduate of the University of Michigan.
To learn more about supply chain modeling, download LLamasoft’s ebook on this topic.