When leadership teams hear “Supply Chain Network Design” (SCND), they typically focus on two variables: freight and warehousing. For most, SCND is simply a cost-reduction exercise and a tactical effort to shave miles off a route or find a cheaper ZIP code for a distribution center.
However, there are many other benefits of completing a network design exercise. When you build a digital twin of your supply chain, you gain insights that carry far beyond the logistics department. Here are three unexpected wins when undertaking a network design project.
Total Baseline Visibility
The most profound benefit of a network design study often happens before you run your first optimization. Executives often operate on assumptions about how their business flows, but the data validation phase tells the real story. As data is collected, cleansed, and summarized into a visual model, “I didn’t know…” or many “ah ha” moments begin to pop up. Leaders often discover item such as:
- High freight premiums due to “out of territory shipments”
- Lanes where high-cost shipping methods are being used (i.e. LTL, Expedited Parcel)
- The amount of product which is handled through multiple nodes in the supply network
- States or regions where freight cost/lb is much higher than the network average
- Many other historical “rules of thumb” that no longer match current market realities
By seeing the business in a single, mathematical lens, organizations often uncover significant savings opportunities before a single future state scenario is even modeled.
Forced Organizational Alignment
In many organizations, Sales, Finance, and Operations operate in silos, each guarding their own version of the truth. Sales wants 100% fill rate; Finance demands low working capital; Operations focuses on throughput and productivity.
Network modeling serves as “neutral ground” for leadership. To build an accurate model, every department must align on the same constraints, service-level targets, and demand forecasts. It forces a cross-functional dialogue that rarely happens organically. By the time the model is finalized, the organization has stopped arguing over opinions and started making decisions based on a shared reality.
The “Data Cleanse” Effect
It is a poorly kept secret that most ERP data is messy. Outdated lead times, incorrect item weights and dimensions, and “ghost” inventory often hide in the noise of daily operations.
Network modeling is the ultimate stress test for data quality. Because a model won’t “balance” with bad inputs, inaccuracies immediately bubble to the surface. The modeling process acts as a rigorous audit of your master data. The result? You emerge with a cleaner, more reliable ERP system that improves everything from procurement accuracy to customer billing.
Summary
Supply chain network modeling is often sold as a way to save on diesel and rent, but there are many other benefits which act as a catalyst for business health. By identifying current-state inefficiencies, aligning leadership, and improving data integrity, SCND is much more than just dots on a map.
—Brad Barry, St. Onge Company
