An agile supply chain enables you to rapidly respond to customer needs, shifts in the market, and potential disruptions. So how do you achieve it? Supply chain strategies, including network optimization, help you make your supply chain more flexible so you can easily adapt when needed. Apply supply chain network optimization in your business to maintain exceptional service delivery in any situation.
What is Supply Chain Network Optimization?
Optimizing your supply chain network involves strategically using data to assess your facilities, transportation routes, and inventory and identify improvements. Companies use it to achieve business goals such as:
- Reducing costs
- Increasing efficiency
- Improving customer service levels
- Improving supply chain resilience
Network optimization in the supply chain helps you shorten delivery times, lower transportation costs, and manage your inventory based on accurate forecasting. First, list your goals. Then map your whole supply chain and use software to simulate different designs and see how they impact operations. The results will show you how to best plan and manage your facilities, inventory levels, and transportation methods.
New technology, including artificial intelligence and machine learning, uses data and analytics to model different scenarios. For example, you can run a scenario in which one of your warehouse locations is closed due to inclement weather and see how much it disrupts deliveries. Or see what happens if you move your biggest distribution hub to a different city.
The Network Optimization Process
Your optimal supply chain network is unique, and what works for a different manufacturing company may not be best for your customers. Use supply chain network optimization software to save yourself from costly trial and error.
These programs create digital twins of your physical supply chain from your facilities to your delivery routes. You enter various scenarios into the program and see how they play out through your digital twin.
Follow this three-step process to understand your specific business needs and plan the best supply chain network for you.
1. Design
During the design phase, you make strategic decisions regarding where to locate your facilities, including warehouses, plants, and distribution centers. Consider your goals and overall business strategy with planning your network.
Do you want to reduce costs or increase speed and efficiency? The answer could be both, in which case, you would need to prioritize. Adding more distribution centers across the country is more expensive, but it helps you deliver product to your customers faster.
This is where modeling software comes in handy. Gather historical data on supplier locations, current facilities, transportation routes, customer behavioral patterns, and inventory levels. Once you’ve fed the data into your modeling software, run different scenarios to find the right balance of facilities for your needs.
2. Planning
The planning phase will help you visualize how your supply chain network will work based on your needs. This stage involves demand forecasting, planning inventory, creating production schedules, and developing a logistics strategy.
While you’re planning your network, identify areas in which you can implement supply chain automations and other efficiencies.
Your optimum supply chain network will allow you to effectively balance your inventory and production resources based on customer demand. Use your software to analyze past customer data, market information, and seasonal patterns so you know how much inventory you need to meet customer needs without overstocking.
AI and machine learning can analyze large, complex datasets for improved forecast accuracy. AI-powered supply chain planning software can also help you assess risks. Use your customer demand insights and identified risks to see how different scenarios impact your supply chain. You might learn that you need to diversify your supplier base or make better contingency plans for likely disruptions.
Assessing factors that impact your inventory lets you proactively plan for potential disruptions so you can quickly respond. It also lets you anticipate situations that can cause a bullwhip effect.
3. Execution
Phase 3 in supply chain network optimization involves analyzing your plans in action. During this phase, you monitor your network in real time. During this phase, you might add new warehouse management software or use RFID tags or IoT sensors to collect supply chain data. These tools also give you end to end visibility into your supply chain, which increases operational efficiency.
Track performance metrics such as operational costs, delivery times, inventory turnover rates, and others. Compare them to historical data to see how optimizing your network has impacted your business. If you’re not seeing substantial improvements in one area (such as reduced delivery times), revisit the planning stage and make more changes.
Keep monitoring your supply chain network and making adjustments as needed.
Benefits of Network Optimization
Why do you need supply chain network optimization for your business?
- Efficiency and Cost Reduction: A well-planned, optimized network lowers your carrying costs without affecting your customer service levels. It also reduces transportation costs and streamlines your operations.
- Agility and Resilience: Optimization helps you anticipate potential disruptions so you can respond. You learn how sudden changes in demand, supply shortages, and other factors impact your operations, allowing you to make backup plans.
- Customer Satisfaction: An optimized network speeds up delivery times, which makes your customers happy. Supply chain network optimization also improves order accuracy and enhances the overall customer experience.
Supply Chain Network Optimization with Surgere’s Solutions
Effective supply chain network optimization hinges on data. Even the most sophisticated supply chain network modeling software needs accurate data to run realistic scenarios. Suregere’s end-to-end supply chain solutions can collect this data.
From RFID tags and IoT tracking devices to AI-powered demand forecasting software, we offer the solutions that give you real-time supply chain visibility. These tools will help you evaluate your supply chain network and develop plans to make it run smoothly.
You can also manage your data in a centralized platform, which makes the tracking and execution process easier. Keep an eye on your data to make process tweaks for even greater efficiency.
Learn more about Surgere to see how we can help you optimize your supply chain network.
