Network Optimization
Overview
Network optimization solves for the optimal supply chain network design with the lowest total cost structure given a set of constraints. Network optimization is typically defined into three segments: Sourcing, Manufacturing and Distribution optimization.
Practical applications for network optimization include:
• Manufacturing site selection, capacity utilization, and product allocation
• Distribution center site selection, number and size of locations and product allocation
• Customer service territory assignments to DCs and plants
• Strategic sourcing strategy development to optimize total landed cost
• Merger and acquisition network synergies development
• Global network expansion to new markets
• Strategic master planning for manufacturing and inventory optimization across multiple time periods
• Greenhouse gas emissions and carbon footprint analysis
Business Problem
Are you experiencing these business challenges? Do these questions sound familiar?
Common Business Challenges
• Customer demand patterns shift overtime
• Changing customer service level requirements
• Increasing manufacturing, transportation, or warehousing cost disproportionate to revenues
• A significant change in available manufacturing capacity (plants opening/closing, production line start-ups/shut-
downs, etc.)
downs, etc.)
• Changing manufacturing strategy: Build-to-Stock vs. Postponement
• Changing distribution strategy: Fragmented vs. Consolidated
• Poor utilization of transportation modes or assets
• Unable to drive significant saving from process improvement alone
Key Questions for Consideration
• What is the total cost and customer service level trade-offs between alternative network designs?
• Do we have the right number, location and size of distribution and manufacturing facilities? What additional supply chain cost is incurred to meet customer service levels?
• Are we optimally sourcing, manufacturing, and distributing the right mix of products at the right facilities? What is the impact of capacity constraints?
• Are customer service territories assigned to the appropriate distribution centers?
• What is the cost impact of changing transportation modes?
• How can we optimize our sources of supply and mitigate risk?
• What is our carbon footprint? How would our supply chain design change to optimize for carbon emissions?
Service Solution
Supply Chain Acuity’s Network Optimization service helps our clients evaluate potential alternative supply chain network structures by quantifying the total operational and financial cost and customer service impact. We are experienced in using multiple sophisticated network optimization tools to solve complex problems with specific product or operational constraints. We can build single or multi-time period supply chain models to minimize cost or maximize profit.
Supply Chain Acuity performs extensive data cleansing and robust analysis to properly aggregate and classify data necessary for solving the issue at hand. With our expertise and experience, we work collaboratively with clients to define the strategic objectives and key questions to be answered and avoid many of the project management and data pitfalls common to supply chain modeling. By solving the right problem we build the right model and get the right results.
Delivered Benefits and Desired Outcomes
• Design the optimal or “best” supply chain network and product flows given customer service level
requirements and operational constraints, from supplier to manufacturing to distribution
requirements and operational constraints, from supplier to manufacturing to distribution
• Quantify operational and financial costs of alternative supply chain network designs and identify improvement opportunities
• Ability to model and quickly run “What-If” scenarios to understand key cost drivers and evaluate trade-offs between customer service level and supply chain structure and operations cost
• Reduce total supply chain costs (sourcing, manufacturing, warehousing, transportation and inventory carrying cost) while
meeting customer expectations
meeting customer expectations
• Increase manufacturing and distribution asset utilization
• Improve transportation mode selection and utilization
• Determine the appropriate capacity and space requirements for a facility
• Develop master planning for manufacturing and inventory optimization across multiple time periods
• Quantified and projected carbon emissions