A major challenge I see for many organisations is the ‘shape’ of their Supply Chain network. OK, what do I mean by shape?
Quite simply I mean the physical nodes, facilities and product flows. All the way from the point of Supply to the Customer.
Just think about your own Supply Chain for a moment. Can you picture how products move through it? How many different ‘paths’ there are through the network for example.
Supply Chain networks are becoming more complex to meet the ever increasing demands of customers and products as well as the constraints of supply and cost. So here are some things to look out for in your own organisation:
1. Do you understand how far your inventory needs to be, in hours or kilometres, from your customers? To meet service levels.
2. What percentage of product movements are merely to reposition inventory in the network?
3. Do you have obsolete or slow moving stock ‘trapped’ within your network? Maybe it’s just in the wrong place to meet current demand?
4. Are your main stock locations positioned closer to suppliers or point of supply; or closer to customers? What drives that decision?
5. When you create a new ‘node’ in your distribution network, what’s the decision process to pick the location? Do you weigh up land costs, building costs, access to labour, inbound transport costs, outbound transport costs, customer service needs and the impact on overall network inventory levels? Or like many organisations, is it a decision based on a far more basic approach?
It’s a challenge isn’t it? But there are some simple approaches that you can adopt to make your decision making more robust so that it ‘stacks’ up to scrutiny and meets your organisation current and future needs.
I’m actually planning to run a Free Webinar on the topic very soon. So watch out for registration details on this page.
But in the meantime, here are some resources you might find useful. Distribution Network Design. This page also has a handy free download.
Please feel free to comment below based on your own experiences, or if you have a question. I read and answer all of them personally.