The ongoing pandemic highlights the need for companies to make quick and accurate “what-if” decisions concerning their supply chains. However, it can take several months to create a network model from scratch. And even then, it may be hard for leaders to buy into the results without using a proven approach.
As recent events demonstrate, these uncertain times require the ability to make quick yet informed decisions about your supply chain in response to unforeseen fluctuations in demand, supply, or capacity. Since these fluctuations will continue in the near term, there’s no time like the present to get your supply chain analysis toolbox up to speed.
Increase the accuracy of your decisions in a matter of days
Too often, quick tactical decisions are made using some kind of back-of-the-envelope analysis or a top-down approach. In either case, these types of analyses usually consider just a handful of the costs, capacities, or other relevant inputs related to the decision at hand. As a result, the answer you get will be incomplete at best or misleading at worst.
Ideally, even in time-sensitive situations, you should use a full network model that incorporates all of the relevant costs, capacities, and functional trade-offs. Here’s the good news: You don’t have to start from scratch. You can repurpose an existing – or at least a somewhat recent – network model to speed up the analysis and improve your decision-making ability. Even in an out-of-date model, your data elements are in a framework that facilitates robust decision making across the required scope of analysis.
Repurposing models pays off during COVID-19
In our experience, it only takes a few days to repurpose a model versus months to build a model from scratch. In fact, we’ve recently helped several of our clients do this to build confidence in the decisions they’re making during the COVID-19 pandemic.
A leading cleaning products manufacturer recently repurposed its 18-month-old supply chain network model. The refreshed model was used to re-allocate production volumes across multiple plants in response to significant increases in demand due to COVID-19. The total elapsed time from the initial discussions to successfully modeling scenario outputs was 14 days. The models included freight cost, manufacturing cost, and manufacturing capacity. The company’s leadership was able to make better and more informed tactical decisions with a higher degree of confidence as a result of this repurposing exercise.
Another client, a major food manufacturer, needed to reassign customer volumes within its distribution network quickly. Coronavirus-related absenteeism had reduced shipping capacity at a distribution center in the northeastern United States by 20 to 25%. Although customer pick-up volume had to remain at the DC in question, the manufacturer was open to reassigning remaining customers to other DCs. The specific questions they were interested in answering were:
- Which DCs should be used to relieve the capacity of the northeastern DC?
- Which customer orders should be re-assigned to these DCs?
- What’s the expected change in freight costs associated with these changes?
- What service and transit-time impacts could customers expect?
- What would be the incremental increase in weekly load volume on the alternative DCs?
Within seven days of reviving their strategic network model, these questions were answered on a customer-by-customer basis. This information enabled the manufacturer to quickly reassign appropriate volumes and avoid further delivery disruptions.
“Current” conditions are in a constant state of flux due to COVID-19. Agile organizations that can make adjustments quickly are at a distinct advantage. How rapidly can your organization make an informed decision? It’s something to consider as we work through the supply and capacity challenges that await us all in the weeks and months ahead.
Chainalytics’ Supply Chain Design team works with clients to make the best use of the resources at hand during this critical time. Our combination of top supply chain talent, proven methodologies, and exclusive market intelligence delivers actionable insights and measurable outcomes for organizations looking to maximize the value of their supply chain. Reach out to us if we can assist you in improving the accuracy and dependability of your quick supply chain decisions.
Jeff Zoroya is a Principal in Chainalytics’ Supply Chain Design practice. Jeff leads data-driven engagements in supply chain network design and strategic planning across all major industries, including Retail/Wholesale, Food & Beverage, Consumer Goods, High-Tech, and Industrial.
