Home' MHD Supply Chain Solutions : MHD May-Jun 2016 Contents T
he main supply chain modelling providers
have invested serious time and money
developing more sophisticated tools that not
only provide greater modelling capability, but also
provide more relevant linkages between strategic
network/supply chain design and daily operations.
The traditional ‘silo’ approach to network
design projects was to conduct strategic
reviews of logistics infrastructure every three
to five years. This was typically focused on
warehousing and/or transportation issues
located in one region or country.
There is now a better way to do things.
Today’s modelling tools allow for a far more
comprehensive and inclusive look at all
elements of the supply chain. A critical factor
in the significant improvement in modelling
capability has been the use of three-tier client
server architecture. This has allowed for larger
and more complex models to be built and
solved in dramatically reduced time.
Today’s tools allow for more regular modelling
interventions at a time frame suitable to your
business (e.g. weekly, monthly, quarterly, etc.)
and include additional key elements of the
supply chain such as inventory, resources,
taxes, exchange rates and even carbon.
The latest supply chain modelling tools now
have the capability to:
1. Determine the optimal individual
SKU flow through an optimally designed
strategic supply chain network.
This is a major enhancement that can
revolutionise the way an organisation sources,
stores and distributes its inventory. Individual
product flows can now be optimised through a
supply chain. This is particularly advantageous
when trying to determine the flows for new
product lines, or how new markets will be
serviced. An organisation can now look at its
entire inventory holding and determine the
optimal way of getting each individual product
to market. The potential for savings and
efficiencies here is enormous.
2. Model over multiple time horizons to
identify and determine changing inventory,
infrastructure and resource requirements.
This is another major enhancement. Application
of this functionality allows an organisation
to determine the warehousing capacity
requirements during the year. An example is
the ability to account for the resource needs
for the winter lows and the Christmas peaks.
It also allows for an organisation to determine
its inventory, warehousing and transportation
requirements over, say, a five-year period,
ascertaining exactly, for example, when new
facilities will be required.
3. Global end-to-end Supply Chain
The latest modelling tools allow for sophisticated
global networks to be optimised. Key global
supply chain costs and components including
exchange rates, tax rates and alternative
transportation methods can be incorporated into
a model to determine the best global network for
an organisation. Global models can determine
the optimal places of manufacture, points of
export and import, inventory consolidation points,
and the optimal transportation configuration.
4. Create an optimal transport routing
schedule from an optimally designed
strategic supply chain network.
This is a major enhancement to the traditional
network tool. It allows the user to take an opti-
mally designed supply chain network and deter-
mine detailed vehicle requirements and routing
plans to match that network. This is one of the
key linkages from strategic planning to daily
operations. It is a feature that adds considerable
credibility and accuracy to any supply chain
5. Establish the optimal mix of third-
party carriers, own fleet and multi-modal
transport options by channel.
The new models can determine the optimal
mix of transportation providers and modes.
This is particularly useful in organisations that
have seasonal peaks and troughs in demand.
With the multi–period functionality the tools
can determine an organisation’s base fleet
requirement, and when that needs to be
supplemented with third party providers in times
of peak demand.
The latest modelling tools are certainly very
much superior to those that existed even a few
years ago. Development continues both at a
technical level to improve algorithm capability
and solve times, and at a functionality level
to increase the accuracy and detail to which
the models can represent the real world. The
focus is to continue to bridge the gap between
strategic modelling and daily operations, so
as to ensure the relevance and accuracy of
network modelling recommendations. For the
supply chain professionals and other users of
these tools, there is now the ability to produce
more detailed and more accurate models that
increasingly represent the real world. This can
only enhance strategic and operational decision
making and thereby ultimately improve an
organisation’s financial performance.
Will Arnott is the CEO of Lexian Solutions.
For more information call +61 2 6377 4614,
email email@example.com or visit
THE LAST TWO YEARS HAVE SEEN A QUANTUM
LEAP IN THE FUNCTIONALITY AND SOLVING
CAPABILITY OF SUPPLY CHAIN MODELLING TOOLS.
HERE ARE FIVE MAJOR ENHANCEMENTS IN THE
NEW GENERATION OF NETWORK DESIGN TOOLS.
Individual product flow schematic.
MHD SUPPLY CHAIN SOLUTIONS — MAY / JUNE 2016
IT IN THE SUPPLY CHAIN
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