The “defining moment” of your supply chain performance is the time and place availability of products in response to customer demands for shorter lead-times and lower prices. This is all in the backdrop of aggressive competition and escalating operating cost for facilities, equipment, fuel, systems, and insurance.
A logistics network optimized to improve customer service and minimize operating cost is a fundamental requirement for the winning enterprise. Determination of the network is a process incorporating strategic and tactical elements. Our four-step approach provides our customer with a balanced approach to the art and science of network design.
Business and Logistics Strategy
- The business and customer requirements that create competitive differences are defined in terms of logistics support and functionality.
- The value of the competitive advantage is described and quantified.
- The logistics support and functionality are defined in terms of the current capability and relative costs.
- A conceptual description and model of the network strategy.
Data Collection and Organization
- Clearly define the elements of data to be collected.
- Collect, organize, and analyze historical production, inventory, and shipment data.
- Use assumptions, forecast, and logistics strategy elements to transform the historical data to the best, worst, and most likely picture of the future.
- Preparation of the data to be used in the numerical network modeling.
- Select the appropriate modeling tool.
- Model the current network to prove the accuracy of the data and model rules. This creates a baseline to which alternatives will be compared.
- Model alternatives and scenarios that support the scenario of the model. Make adjustments to each scenario to test sensitivity volume, cost, and service drivers.
- Fine tune the alternatives providing the desired results until the optimum solution is reached.
- Define the benefits and risks associated with each alternative. Document the trade-offs between the alternatives.
Define the Recommended Network
- The strategic “fit” of the recommended network.
- The number and locations of distribution facilities.
- The products and inventories to be stored in each facility.
- The services levels and customers assigned to each facility.
- The capital required to build the network, the fixed and variable cost of ongoing network operations, and the financial benefits of the network.
- The path and resources required to transition from the current network to the recommended network.