Supply Chain Design

StelliumBlogSupply Chain Design

Aug

2

Supply Chain Design

Stellium helps its clients designing the most efficient and effective supply chain

Efficient and effective supply chain management is well planned and purposeful. Supply chain design should be strategically aligned with organisations long term goals. Three main key factors which drive the supply chain design of any company are: influencers, design considerations and building blocks. The business model adopted, the firm’s surrounding environment, the firms target, and the lifecycle are the major influencers of design process. Social, behavioural, physical design aspects are taken into the design considerations. The level of inventory, capacity constraints, technology used, transportation models are the building blocks of the supply chain design.

A firm’s success depends on the efficiency of its supply chain:

A truly effective supply chain can give huge competitive advantage to the company over its rivals. Effective design will consider four factors cost, quality, delivery and responsiveness. A strategically designed supply chain will significantly reduce inventory build-up while enhancing responsiveness. This will significantly impact the firms long term capital investment goals.

Stellium’s highly dedicated team of supply chain experts from diversified industries helps its clients in strategically designing their supply chain. Stellium end to end supply chain design capability ranges from procuring raw materials into factory to delivering the finished products to the end customer. Stellium’s revolutionary products which include planning, scheduling, monitoring software can effectively plan raw material procurement to scheduling process flow in manufacturing. Real time KPI monitoring through customized dashboard enables companies track their supply chain efficiency and remove nonvalue added activities.
Stellium’s supply chain experts undertake supply chain design assignments which include strategy refinement in association with process design & optimization; network design and optimization; sales and operational planning and supply chain policies and norms. Most organizations witness organic growth which leads to setting up supply chain nodes based on growing supplier or customer bases. Such a supply chain network does not necessarily work in favour of the organization, but it certainly brings in a lot of inefficiencies, misplaced inventories, and higher costs. Stellium’s data-driven approach helps model real-life constraints in supply chain design to arrive at practical solutions that yield results.

Network Design & Optimization

Optimal network design solutions that consider factors like product differentiation, geographical constraints, tariff and taxation, incentives, business and policy risks, competitive factors and evaluating trade-offs between cost leadership and responsiveness.

Service Level & Inventory Optimization

Making the most of the locked inventory capital requires a detailed understanding of demand patterns, careful crafting of service levels and tweaking of supply chain parameters.

Supply Chain Cost Optimization

Achieving aggressive growth targets and delivering significant, measurable savings within complex supply chains by analysing the cost structures and better aligning the supply chain strategies

Integrated Supply Chain Planning

Making more integrated decisions that are best for the business by balancing customer service, inventory, and cost-to-serve.

Distribution Strategy & Design

Improving customer reach and reducing lead times while ensuring minimum operating costs by the efficient movement of products to customers.

Network Design & Optimization
Overview
Stellium Edge
A responsive supply chain is paramount to customer satisfaction

Distribution network optimization is a critical ingredient to sustaining growth through a rigorous customer focus. Sub-Optimal network design can bring inefficiencies in the supply chain resulting in misplaced inventories and higher costs. Distribution network optimization is, therefore, the key to competing in new markets or regions, reaching customers where they prefer to buy and achieving this profitably. Our typical approach involves performing a comprehensive review of distribution strategy and then identifying the key drivers of performance and cost in the distribution network, developing a hypothesis to quickly understand the key trade-offs among important variables such as warehousing, transportation and service level through extensive analysis. Finally, improvement opportunities are prioritized based on the potential value to an organization and a roadmap is built to successfully optimize the distribution network.
By conducting a thorough analysis of their network, companies will be armed with the necessary quantitative metrics to make informed, strategic decisions regarding:

  • Plant locations and capacity
  • Distribution locations and sizes
  • Possible pricing levels
  • What products to produce and where
  • Inventory levels
  • Customer service levels

To stay ahead of the competition and maintain operations at maximum profitability and productivity, companies need to examine how their supply chain will handle change. A wide array of activities can cause significant changes to the supply chain, including:

  • Strategic planning
  • Growth
  • Changing customer base
  • Divestment
  • Expansion
  • New product lines
  • Sourcing
  • Acquisitions
  • Consolidation
  • Carbon footprint reduction
  • New markets
  • Inventory
  • Mergers
  • Deconsolidation

A supply chain network optimization empowers companies to compare the current state of their supply chains to multiple “what-if” scenarios. They can then develop concise, strategic plans and goals based on sound metrics. The end in mind of a supply chain optimization is to provide results that enable companies to move forward in a secure manner.

Service Level & Inventory Optimization

Stellium’s supply chain experts helps clients to maintain highest possible service levels. The main goal is to minimize stockout rates, maintain adequate stock, maximize response times, increase revenue, reduce carrying costs and improve customer satisfaction.

Reduce inventory without sacrificing customer service postponement

Inventory and Service-Level Optimization can establish service-level targets that reflect the profitability of an item, location, or customer. Inventory, like all other investments alike, need prioritization based on material, customer and geography. This way, global service-level targets are met, while simultaneously high-value-low-demand items help control inventory and maximizing revenue. By mathematically modelling all relevant drivers of inventory requirements and lost revenues – such as sales volume, demand volatility, lead times, and capacity constraints – optimal inventory levels are estimated.

The goal of inventory management is to achieve a trade-off balance between the cost of inventory and service levels. Service level requirements are largely stipulated based on the business context, competition, penetration levels, and growth plans. Various statistical techniques are available to calculate adequate inventory that minimizes the cost for a given service level. Applicability of these statistical techniques is governed by the volumes and pattern of sales volumes and varies with industry.

With inventory optimization, supply chain managers can right-size their inventory to balance the trade-offs between just-in-time and just-in-case strategies. Rather than dealing with headaches from pressure to improve service levels while maintaining/increasing gross profit margins by reducing inventory costs, supply chain managers can achieve new inventory process capabilities:

  • Determine safety stock targets for inventory at critical nodes in the supply chain
  • Measurement of customer service levels during the execution phase
  • Ability to replenish inventory into distribution buffers based on customer demand
  • Availability of end-to-end inventory data for performing inventory management functions

Specifically, inventory optimization achieves visibility on the demand side that supply chain managers can’t gain manually. Through operation at the SKU level, an inventory optimization solution can normalize the variability of demand to set safe levels of inventory — the middle ground between just-in-time supply and just-in-case stocking.

While not every best-in-class organization has implemented inventory optimization, there is a direct relationship between implementing inventory optimization and succeeding in balancing service levels with supply concerns.

Benefits
The goal of inventory management is to achieve a trade-off balance between the cost of inventory and service levels
Service level requirements are largely stipulated based on the business context, competition, penetration levels, and growth plans
Various statistical techniques are available to calculate adequate inventory that minimizes the cost for a given service level
Applicability of these statistical techniques is governed by the volumes and pattern of sales volumes.

Supply Chain Cost Optimization

Stellium’s Cost Optimization services help companies in analysing Supply Chain costs and drivers to generate valuable insight into the trade-offs and performance differences among various products, customers or with competitors.

Profitability and cost are at the core of Business performance. However, competition in the market and increasing customer expectations are making the Supply Chain Costs even more relevant today. In most organizations, the indirect costs as part of the overall costs are growing. And growing differentiation of Product offerings to customers, i.e. “value added” varies by customer and products. In short, to preserve margins and ensure profitability, organizations need to monitor and manage their Supply Chain Network and Processes continuously.

Stellium’s proven approach in Supply chain cost optimization helps companies to drive higher profit realization and asset efficiency. Our “True Profitability” model is driven by a comprehensive understanding of the cost and revenue elements associated with Customer / Product.

We take up detailed analysis to determine the most relevant cost drivers and the relative effect of each for the company’s supply chain. Typically cost drivers are primarily divided into three categories:

Scale: The effect of volume and technology on supply chain cost per unit
Efficiency: e.g. Productivity, Utilization of Network Resources and Complexity
Factor Costs: e.g. Input costs (e.g. Labour), Operating costs and Logistics costs
Further advanced optimization techniques help optimize the overall cost for the Supply Chain network while meeting Customer Service and other business-related constraints.

Insights

Organizations can unlock significant value by actionable insights generated from our Analytical approach and enable value-based supply chain strategy and design.

We combine the power of deep functional & industry expertise, analytics & optimization sciences, process engineering and advanced technologies to deliver inventive solutions. We are a specialized firm focused on helping our clients achieve sustainable results by improving Value Chain and minimizing decision latency across the organization.

Integrated Supply Chain Planning

Stellium’s Integrated Planning services help companies identify, implement and institutionalize S&OP, Forecasting, Supply, Production Scheduling and Inventory optimization improvements that drive tangible business results

Integrated Supply Chain Planning is the process of aligning the Demand Plan the Supply Plan and Operations plan with the Business plan to deliver Profitability, Growth and other Business Goals.

However, many of the organization’s performance is constrained due to a lack of effective Integrated supply chain planning processes primarily due to factors like the Siloed planning process, Long planning cycles, Lack of ability to continuously sense and quickly respond, Lack of flexible IT systems support and inadequate management focus.

We apply deep and distinctive functional expertise to help clients overcome typical supply chain planning challenges to balance customer service requirements, working capital investment, and customer and product portfolios to achieve the maximum performance from your current inventory investments and network capacity as well as plan for future growth.

Stellium’s typical Integrated Planning Engagements may focus on one or more of the following key areas:
Sales and Operations Planning (S&OP)
Demand Planning
Inventory Optimization
Supply & Replenishment Planning
Production Planning and Production Scheduling
Order Promise / Available-To-Promise

Stellium experts work with the client to develop the future state strategy, organizational design, business processes, and technology requirements to unlock value in your Supply chains to meet Business Goals.

Distribution Strategy & Design

Make distribution your winning strategy in the marketplace with Stellium’s unique fact-based approach. Stellium’s Distribution Design offering helps client align distribution networks and infrastructure with Customer Experience needs

In today’s market scenario, Customer Experience needs are finally shaping distribution strategies. Given the competition in the marketplace, it is inevitable for companies to define their Distribution Strategy that achieves the desired Customer and Consumer Experience at the most optimum cost to the business.

Stellium’s approach to Distribution Strategy and Design focusses on establishing an affordable trade-off between Customer Service and Cost, a methodology that has yielded successful results with our clients. The objective of such exercises is to design a flexible and scalable solution that can cost-effectively accommodate the future volume, business expansion, and business variabilities.

Stellium’s typical Distribution Design engagement may focus on one or more of the following key areas:
Customer Segmentation and Customer Service definition
Omni-channel Fulfilment design
Distribution Network Infrastructure
Integrated Supply Chain Planning processes
Order Fulfilment and Warehouse Management processes

Add Comment

Your email address will not be published. Required fields are marked *