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The Benefits of Supply Chain Network Optimization

The supply chain has a far-reaching impact on the entire organization, making it critical to understand your entire supply chain network. It’s not a once-and-done evaluation. Supply chain network optimization requires continual supply chain assessment. 

A brief by Supply Chain Dive Supply referenced a recent industry report that found 74% of supply chain professionals say their organizations are either already using inventory and network optimization tools or expect to do so within the next couple of years. End-to-end supply chain awareness is clearly a top priority.

Supply chain network optimization is the strategic process of examining and measuring the entire supply chain to identify performance, risks, emerging issues, and opportunities, such as reducing costs. Armed with this knowledge, leaders can make more informed decisions that can lead to significant improvements in areas such as:

  • Productivity
  • Quality
  • Speed-to-market
  • Vendor selection
  • Inventory levels
  • Pricing optimization
  • Resource capacity
  • OTIF commitments
  • Cost overruns

As important as these improvements are, supply chain network optimization brings something even more valuable in today’s dynamic environment: the ability to more effectively manage change.

Change Management via Supply Chain Network Optimization

When organizations excel at supply chain network optimization, there is a much greater capacity to meet commitments, satisfy customers, build reputations, and ultimately, improve marketshare. In fact, an optimized supply chain network often becomes a differentiator.

Not only do companies need to be able to quickly identify risks and seize opportunities, but optimization also provides a greater ability to manage change. Change can come from anywhere at any time. An agile supply chain doesn’t react to change, it proactively responds to change indicators ahead of time so change doesn’t become a disruptor. 

We need to look no further than the global COVID-19 pandemic to understand how valuable an agile supply chain is. Perhaps at no other time in U.S. history have so many industries had to shift their supply chains so quickly. Deloitte says, “A decades-long focus on supply chain [network] optimization to minimize costs, reduce inventories, and drive up asset utilization has removed buffers and flexibility to absorb disruptions – and COVID-19 illustrates that many companies are not fully aware of the vulnerability of their supply chain to global shocks.”

Related: COVID-19 Case Information Added to Sunrise

In order for companies to be more nimble to change, they must be able to have complete visibility into the supply chain. End-to-end supply chain visibility means organizations should focus on removing silos, connecting data, supporting cross-functional collaboration, and as Deloitte says, “leveraging advanced technologies”, such as predictive intelligence, to “anticipate and meet future challenges.”

A Journal of Global Strategic Management report published by ResearchGate found “Agility in a supply chain is the ability of the supply chain as a whole and its members to rapidly align the network and its operations to dynamic and turbulent requirements of the customers. The main focus is on running businesses in network structures with an adequate level of agility to respond to changes as well as proactively anticipate changes and seek new emerging opportunities.”

By consistently assessing the supply chain, organizations always have an eye on the areas where more transparency, integration, process changes, and technology are needed to maximize efficiencies and productivity. This is the ultimate goal of supply chain network optimization. 

Leveraging Predictive Analytics as Part of Supply Chain Network Optimization

One of the riskiest and unpredictable elements of the supply chain is logistics. Shippers and carriers are often in the dark when it comes to understanding the full breadth of their risks and how to mitigate them, making it challenging to optimize the supply chain. The weather, natural disasters, climate, infrastructure issues, and social unrest don’t often come with much warning. COVID caught everyone off guard. Change is persistent, particularly along the entire planned shipment route. For instance, temperatures, rainfall, snow, and winds can fluctuate dramatically just a few miles apart. A hurricane can change track a day or less before landfall.

Related: 3 Steps to Building a Supply Chain Risk Management Plan

Logistics leaders must have access to as much data as possible to be able to make smart decisions early in the planning process on how to mitigate risks to their shipments and facilities. This may mean rescheduling a shipment, changing the mode of transportation, choosing a different type of truck (such as a reefer truck), modifying a lane, preparing a facility, or simply setting the right expectations with the customer. The sooner decisions and plans can be made, the greater the chance disruptions to the supply chain can be avoided. 

Data that is locked in system silos isn’t accessible. Data that resources have to manually gather from multiple internal and external sources is rarely comprehensive and doesn’t paint a complete picture. And data that is buried in spreadsheets is error-prone, historic, and takes too much time to make it actionable. 

Riskpulse offers a software solution that leverages predictive analytics to automate the entire risk assessment process, using predictive intelligence to not only detect and analyze risks, but also to automate the task of finding lower-risk alternatives to current plans.

On the risk detection side:

  • The software rapidly scans planned shipments, accounting for origin, destination, pickup time, and projected arrival time.
  • It then simulates the entire lifecycle of the shipment with forecasted conditions.
  • The system scores each shipment based on risk severity.
  • It flags the locations where specific threats are most likely to occur per shipment, displaying the data on a dashboard for easy consumption.

On the analysis side, the software digs into the details so decision-makers can visualize risks as they pertain to each shipment – a full 10 days before the scheduled shipment. Going even further, the data reveals interdependencies and connections up and down the supply chain, helping leaders with supply chain network optimization. Having this level of detail, presented in a graphical way, speeds decisions, and gives leaders data to justify those decisions. 

Finally, there is decision optimization. Even with all of the data in hand, there is still an opportunity to increase the speed of decisions. The software offers another layer of functionality, automating the decision-making process. Leaders still make the ultimate call, but the software uses all of the data to suggest the most viable options to mitigate risks, reduce costs, and meet customer expectations.

The real beauty of predictive analytics is it is ideal for managing change. Because it is always working in the background and uses real-time data, organizations have what they need to quickly pivot when change happens – and when it comes to logistics, change is always happening. 

No matter where your organization is in its supply chain network optimization efforts, if you haven’t already integrated predictive analytics into your technology stack, it’s time to make it a priority. Legacy systems, pieced-together “solutions,” and manual processes are obsolete, putting your organization at a significant disadvantage. Remaining competitive and resilient to change demands cognitive technology that automates risk detection and mitigation so your people can focus on planning and decision-making instead of digging for data and responding to the damage already caused by risks. 

Know your risks before you ship. Watch Riskpulse in action.