Supply Chain Planning and supply chain design are closely interlinked processes. Planning focuses on how to best meet demand, including inventory management, production scheduling, and distribution. At the same time, Supply Chain Design involves structuring your supply chain to enable efficient planning and operation. It encompasses decisions on facility locations, transportation networks, and capacity.
Effective design lays the groundwork for efficient planning, while robust planning is essential to realize the benefits of a well-designed supply chain. Both are continuously adjusted based on market changes, ensuring the supply chain remains dynamic and responsive.
GAINS’ Vice President of Solution Strategy, Jeff Metersky, revealed a pivotal truth at the 2023 GAINS Summit: “In supply chain management, design reigns supreme,” as seen by one of GAINS’ Design customers, AmerCareRoyal.
What is Supply Chain Design?
Supply chain design is a multidisciplinary practice involving coordination with execution teams and collaboration with the finance department, executive leadership, and other stakeholders throughout the business. Supply chain design typically involves a dedicated team within a company, responsible for understanding the network model, sourcing data, and reporting to supply chain leadership. By doing the calculations and analysis, the GAINS supply chain design solution provides insights and options that simplify the decision-making process for our customers. Companies shouldn’t get lost in the details of thousands of design decisions. They must focus on the critical aspects of their supply chain and make informed choices based on desired outcomes.
Supply chain design includes making decisions about various aspects, such as:
- Location of distribution centers
- Transportation costs
- Sourcing vendors and customers
- Setting rules for supply chain operations
AmerCareRoyal: A Story Of Redesign Success
AmerCareRoyal, a manufacturer and distributor serving the food service industry, faced significant challenges due to rapid growth from acquisitions (8 acquisitions in 8 years) and the impacts of COVID-19 on the business (the one-two punch of a supplier to the restaurant industry that also supplies PPE). This led to a complicated supply chain with low service levels and high operational costs.
Engaging with GAINS for a supply chain redesign, they established a detailed operational baseline. This process illuminated the inefficiencies and complexities in their existing system. Through strategic redesign, AmerCareRoyal achieved notable improvements in service levels, cost efficiency, and inventory management, demonstrating the effectiveness of a well-orchestrated supply chain redesign. As the case of AmerCareRoyal demonstrates, a well-thought-out supply chain design can lead to remarkable business improvements.
Learn more about navigating supply chain volatility here.
Crafting a Resilient and Adaptive Supply Chain Strategy
Balancing cost efficiency with service quality and the potential for significant changes in operational procedures can be daunting. The challenge lies in making decisions that improve current operations and provide flexibility for future shifts in market conditions, technology, and customer demands.
Strategic supply chain design transcends mere aesthetics. It involves making critical decisions that significantly impact the various aspects of your supply chain operations, including manufacturing, transportation, and distribution. These decisions are not made in isolation; they influence each other and your supply chain’s overall cost and efficiency. For instance, the location of your manufacturing plants has an effect on transportation costs and delivery times, which in turn influence distribution strategies and, ultimately, your customer service levels.
Understanding these dynamics and those of future customer demand, identifying patterns of seasonality, and being aware of market trends are crucial in:
- planning for adequate capacity
- ensuring supply chain resiliency
- maintaining adaptability
- provide cost-efficiency
Strategic design in supply chain management is about aligning these various elements to create a cohesive, responsive, and sustainable system.
Elements of a Successful Supply Chain Network Design Project
- Manufacturing Network Decisions: Decisions on plant locations, capacity, and operations are vital. These affect the entire supply chain’s efficiency and responsiveness. Choosing whether to make or buy and deciding on production approaches like make-to-stock or make-to-order are critical in determining how agile and responsive the manufacturing process can be to demand changes.
- Distribution Network Strategy: This involves careful planning of facility locations, types, and operational strategies. Integrating various levels of automation can significantly alter the cost structure and capacity of a distribution center, impacting the overall supply chain’s effectiveness.
- Transportation Network Design: Choosing the proper modes of transportation impacts lead times and inventory levels. A strategic approach to transportation, different from day-to-day management, can optimize the entire supply chain’s performance and cost-effectiveness.
- Adapting Supply Chain Policies: Regular review and adaptation of supply chain policies are essential to remain effective in dynamic market conditions. This adaptability is critical to maintaining a supply chain that can efficiently respond to changes in demand, technology, and market trends.
- The Role of Data and Analysis: Establishing a solid data foundation and conducting thorough analysis are vital for effective supply chain design. Understanding current operations through data helps make informed decisions, leading to a more optimized and efficient supply chain.
Implementing a strategic supply chain network design significantly diminishes uncertainty in the system by removing variability. Clearly defined elements such as manufacturing network decisions, distribution strategies, and transportation planning ensure that operations align closely with your business goals. The ongoing process of adapting supply chain policies and leveraging data analysis for decision-making further reduces uncertainties. This strategic coherence in the supply chain leads to:
- decreased risk
- increased predictability
- more efficient operations
- enhanced overall performance
- greater adaptability
Empowering Business Leaders with Strategic Supply Chain Design and GAINS Expertise
Understanding the impact of supply chain design for those new to its intricacies is important. Simple design changes can substantially improve business outcomes, such as cost reduction and enhanced customer satisfaction. This highlights the necessity for all business leaders, regardless of their expertise level in supply chain management, to consider the significant role of design in their strategic planning and operations. However, it’s not something your company must tackle alone. GAINS helps simplify supply chain design projects by providing a knowledgeable team of Supply Chain Network Designers armed with AI/ML and advanced analytics tools designed to streamline complex decision-making processes.
Our solutions offer detailed forecasting capabilities, assist in optimizing facility locations, and aid in designing efficient transportation routes. By leveraging data, predictive analytics, and decades of best practices, GAINS helps businesses balance cost efficiency with service quality while accommodating future market changes and technological advancements. This makes it easier for companies to adapt their operations effectively, ensuring current and future supply chain resilience and efficiency.
Additional Reading
Why Supply Chain Design Matters
Supply Chain Design: Harnessing the Power of Cloud-Native Technology