What is Supply Chain Network Optimization? How Does it Work?
Resilient supply chains are the backbone of a successful business. However, designing one can be tricky as it involves several players and factors. Approximately 80% of supply chain expenses are established during the product and supply chain network design phase.
Location intelligence and geospatial analytics software are critical to carve a cohesive strategy for efficient supply chain network optimization as most of its processes involve a high spatial component. According to a recent Gartner survey, machine learning will augment decision-making in most supply chain organizations. In fact, a large number of Chief Supply Chain Officers (CSCOs) agree that augmentation is the preferred approach for tasks like decision-making (82%), scenario planning and modeling (78%), and market intelligence and forecasting (74%).
In this article, let’s explore the need, features, benefits, and more of supply chain network design and why enterprises should invest in one.
What is Supply Chain Network Optimization?
Supply chain network optimization is a strategic process that improves the supply chain performance by leveraging AI/ML-based algorithmic modeling. One of the main aims of a supply chain network design software is to maximize efficiency and reduce costs involved in planning the end-to-end movement of goods. It provides a seamless experience to all the stakeholders including manufacturers, suppliers, warehouse managers, distribution channels, and retail partners.
The supply chain optimization process is divided into three stages — design, planning, and execution.
1. Design
This stage focuses on designing the supply chain network by identifying the most suitable location of the warehouse, production facilities, and distribution centers to minimize the logistics costs.
2. Planning
In the second stage, business leaders focus on demand forecasting, production and inventory planning, and balancing supply and demand. This also includes scheduling deliveries with AI/ML-powered tools to reduce distance and travel time.
3. Execution
This stage focuses on improving last mile delivery efficiency by leveraging location intelligence. It helps in vehicle routing, warehouse and inventory management, transportation management, supply chain visibility and order management systems, and more.
Supply Chain Network Design Challenges
1. Complex Global Supply Chains
Modern supply chains often span multiple countries and involve numerous stakeholders, making them inherently complex. Managing logistics and regulatory requirements across borders complicates supply chain network optimization efforts.
2. Lack of Visibility
The lack of end-to-end visibility of the overall supply chain makes it difficult to design an effective network. Fragmented information about suppliers, customer demand, transportation, and more can lead to efficient network design, which can impact operational efficiency.
3. Managing Risks and Disruptions
Supply chains are vulnerable to disruptions, including natural disasters, geopolitical conflicts, and demand fluctuations. Anticipating and mitigating these risks is essential for maintaining continuity of operations and minimizing the impact on customers.
4. Environmental and Sustainability Commitments
Achieving sustainability goals while optimizing supply chain networks requires careful consideration of transportation emissions, energy consumption, waste reduction, and ethical sourcing.
Features of Supply Chain Network Optimization Software
1. Intelligent Cluster Analysis
The software creates intelligent geographic clusters based on multiple business rules and offers map-based visualization. It analyzes the gaps in clusters and realigns them to optimize network design.
2. Demand Planning
Leverage spatial analysis and derive patterns from balancing supply-demand by analyzing the most suitable location for opening warehouses, DCs, and fulfillment centers.
3. Scheduling and Routing
Design effective delivery schedules based on delivery time frames, order priority, vehicle availability, inventory, etc. The software also balances fleet workload by effectively optimizing order distribution and resources.
Read More: E-Commerce Platform Leverages Dista Insight to Improve Supply Chain Network Design
Benefits of Supply Chain Network Optimization
1. End-to-End Supply Chain Visibility
Optimizing the supply chain network provides enhanced visibility across the entire supply chain, from raw material sourcing to final delivery. This visibility enables companies to track inventory levels, monitor production processes, and anticipate potential disruptions in real-time. With end-to-end visibility, businesses can make proactive decisions to optimize operations and improve coordination between different supply chain partners.
2. Minimize Costs
Optimizing warehouse management, minimizing transportation distances, and creating location-based logistics workflows with the supply chain design software can significantly reduce infrastructure costs. Moreover, automating mundane processes, including processing and inventory management, can reduce labor costs and improve process efficiency.
3. Improve Delivery Efficiency
The software enables stakeholders to improve the movement of goods at all stages of the supply chain. It creates a cohesive supply chain network design strategy that improves a range of factors, including order alignment and streamlining logistics.
How Dista Strengthens Supply Chain Network Planning
According to a Gartner report, by 2024, supply chains redesigned for modularity will operationalize business model innovations in half the time of competitors. Companies using technology to make operating model changes will gain a competitive advantage for efficient supply chains.
Dista’s supply chain network optimization software understands spatial relationships between multiple data points of the supply chain by analyzing 150+ variables to design the most efficient supply chain network. We combine data analysis and visualization to optimize supply chain networks.
Want to check our software in action? Contact us for a free demo.
Originally published at https://dista.ai/blog/supply-chain-network-optimization/
Location intelligence and geospatial analytics software are critical to carve a cohesive strategy for efficient supply chain network optimization as most of its processes involve a high spatial component. According to a recent Gartner survey, machine learning will augment decision-making in most supply chain organizations. In fact, a large number of Chief Supply Chain Officers (CSCOs) agree that augmentation is the preferred approach for tasks like decision-making (82%), scenario planning and modeling (78%), and market intelligence and forecasting (74%).
In this article, let’s explore the need, features, benefits, and more of supply chain network design and why enterprises should invest in one.
