Why You Must Invest in Supply Chain Network Design Software

Supply chain network design is a working model of the supply chain that lets you estimate the time and costs required to bring goods to market.
It helps a business spot supply chain inefficiencies and potential risks.
It also helps a business make optimum use of capital, infrastructure, as well as human resources.

November 22, 2022 | Supply Chain Software

The supply chain network design is defined as a working model that delineates the overall framework of a supply chain to assess the time and costs required to bring goods to the market. This model helps a business spot inefficiencies and potential risks in the supply chain. The model also helps analyze "what if" scenarios to optimize operations, reduce costs, improve service and increase responsiveness.

The key objective of a supply chain network design is to optimize the use of available resources such as infrastructure (warehouses, distribution networks, logistics capabilities, etc), human resources and capital to maintain or improve the service level offered to customers while improving profitability of business.

A network design software leverages organizational data to help businesses optimize their end-to-end supply chain and simulate “What-If” scenarios to foresee risks dynamically, all in a single platform.

How Supply Chain Network Design Software Helps

Here are 5 instances where a supply chain network design software can benefit your business:

1. Increasing business footprint :

When businesses plan to enter new markets or launch new products, it leads to introduction of new elements into the organization’s supply chain. Identifying the right locations for warehousing or choosing the right transport networks are key business decisions. Network design software can aid this decision-making process by helping build scenarios that can introduce these new elements into the existing supply chain, simulate the material flows and costs involved and showcase how the future state would look like.

2. Scaling down operations :

During periods of stress or downturns, it is important to make prudent decisions to reduce the scale of operations by reducing footprint and divesting non-performing assets. Such a decision requires deep understanding and careful analysis of business goals to ensure that it does not impact the efficiency of the supply network in the future. Network design software can help businesses make this sell/hold decision.

3. Mergers and Acquisitions :

A merger or acquisition lets you access the new entity’s resources such as manufacturing sites, distribution networks, suppliers, warehouses, logistics capabilities, and labor. The decision to retain or divest these resources is a complex analytical problem with multiple possible outcomes. Done correctly, it could lead to a strong asset turnover. However, if done incorrectly, it can result in unnecessary cost burdens. A network design software can help run all the potential scenarios and identify the solution that gives the highest ROI.

4. Right-Sizing Existing Network :

Over a period, organizations make several changes in reaction to market forces such as competitor actions, consumer behavior, and geo-political and natural events to meet short-term business objectives. It is important to review if the cumulative results of these actions have created inefficiencies in the overall supply chain and make sure that the network is ‘right-sized’. Network design software helps make this unbiased assessment and spot inefficiencies that can be then eliminated to optimize the network.

5. Risk management/Resiliency checks :

With businesses today moving away from a ‘Just-In-Time’ to a ‘Just-In-Case’ supply chain, it is important to evaluate if the organization’s supply chain is resilient to potential risks. Re-evaluating inventory levels at key locations and transport routes can help determine if the supply chain can operate at the desired service level in case of a crisis. Network design software can help identify the impact nodes and assess potential impact.