HOW TO OPTIMISE YOUR SUPPLY NETWORK?
Why is it crucial to optimise your supply network?
Supply network optimisation consists of defining an optimal configuration of available supply chain facilities: plants, warehouses, available suppliers, outsourcers and Third-Party Logistics (3PL). It allows the definition of inner capacities, negotiation of contracts with third parties and definition of sourcing strategies (which location is served from which other location). All these decisions must be taken consistently with the objective of maximising service levels while minimising the overall cost-to-serve by considering demand and costs.
In a global economy with intense competition leading to price reductions, margins are under pressure, and companies must adapt their supply chain to maintain profitability.
The supply chain must adapt to demand changes to enable high service level and low cost-to-serve. Implementation of an optimisation process for the supply chain network is a key step in enabling companies to reach that level of performance.
KEY PERFORMANCE INDICATORS (KPI)
What are the challenges companies are facing when optimising their Supply Chain network?
Establishing a supply network optimisation process for a company requires a certain level of maturity in their supply chain management: a consistent mid-term demand plan and reliable data to model the supply chain. That level of maturity is reached using established planning processes and solutions.
Taking supply chain configuration decisions among available facilities is feasible only if operations can execute them (adapting the supply chain regularly and not only once every X years). Installing such a process can only be done with change management and executive-level support.
Another challenge faced when defining a supply network optimisation process is finding the trade-off between stability and agility. Supply chain efficiency requires sourcing stability to create performance in both plan decision-making and supply execution while amortising the configuration change costs linked to these decisions. At the same time, supply network optimisation is only effective if updated frequently enough to adapt to context changes. Therefore, finding the right frequency for that process is vital.
Covid-19 impact on optimising Supply Network
In this new era of uncertainties, companies must be able to adapt their supply chain to remain competitive or even survive. So many companies have seen either their demand change drastically (down for some, up for others) or their facilities impacted (shutdown of some plants or warehouses during lockdown).
Optimising supply chain network is mandatory to either lower cost-to-serve to a new demand paradigm or leverage the use of existing facilities.
Download this full Best Practices white paper and discover
the 5 Key Pillars of an optimised Supply Network journey!
In this white paper, you will also learn:
- Who’s concerned by optimising supply network?
- Why is it crucial to optimise your supply network? What are the Benefits?
- How to optimise supply network? The journey towards optimised supply network- The 5 Key Pillars
- How FuturMaster can help you to optimise your supply network?