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Supply Chain Network Optimization: Part 1 - Preparation is Half the Battle

By Ian Hobkirk | 05/08/2014 | 5:38 AM

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With all the change the past six years have brought, it seems as though many companies have prioritized supply chain network optimization as one of their top strategic initiatives this year. I’ve talked with dozens of companies who are seeking the “right” answer for where to strategically place their distribution centers in relation to their product sources and customers. As retailers see high growth in e-commerce and further solidify what omni-channel commerce means to their companies, they are restructuring their networks to efficiently support concepts like store fulfillment and faster direct-to-consumer deliveries, etc. Other companies in different industries are simply looking for ways to impact risk, transportation costs and service. Regardless of what is driving a particular company’s need to re-evaluate the network, a supply chain network optimization, when executed properly, can set the stage for a company’s operations strategy for years to come, revealing the optimal locations for manufacturing and distribution points, as well as the best way to leverage inventory and transportation to support growth.  

This blog will be the first in a series of three parts. In this post, I’ve highlighted some things to think about as you prepare for your network optimization project. Subsequent posts will cover tips for project execution, and ongoing optimization. For a more in-depth view of these points, read the whitepaper: Supply Chain Network Optimization - Three Ways To Avoid a Project Mishap.

Preparation

If supply chain network optimization is in your company’s future, here are some things you can start doing NOW to prepare for a smooth study:

  1. Improve transportation data capture: Make sure your company’s systems are capturing waybill information with each order shipped. This information will allow an accurate view of cost-to-serve for a given customer and can help identify short-term cost saving opportunities.
  2. Improve your data integrity:  Improving your data integrity and getting your data into a position to be extracted accurately is possibly the biggest way you can speed up your network optimization process. Data collection, clean up, and validation are the most common culprits of delayed project timelines.  Invest time upfront in improving the data connections and analytical databases.
  3. Form the right team - Strategic supply chain network optimization projects need to be supported across functional areas. The team must know the targeted performance goals (the “why”) and the importance to the business of the task they are assisting with, and be accountable for the changes in their functional area.
  4. Develop a process to act quickly on improvement recommendations: Windows of opportunity can close quickly. Be ready to implement the recommendation. 

Stay tuned to read tips for executing network optimization studies.

 

 

 

 

 

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About Ian Hobkirk

Ian Hobkirk

Ian Hobkirk is the founder and Managing Director of Commonwealth Supply Chain Advisors. Over his 20-year career, he has helped hundreds of companies reduce their distribution labor costs, improve space utilization, and meet their customer service objectives. He has formed supply chain consulting organizations for two different systems integration firms, and managed the supply chain execution practice at The AberdeenGroup, a leading technology analyst firm.



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