Strengthening your supply chain one link at a time. 

The Value of An Experienced Supply Chain Modeler

A strategic network optimization analysis is designed to address supply chain questions that will have lasting ramifications to a business’ costs, service level and supply chain stability.  Issues such as determining the appropriate number and location of distribution centers and plants, optimal inventory deployment strategy, and customer service territories to name a few.   Specialized network optimization software is utilized by supply chain consultants and internal strategy groups to evaluate these strategies.  In the hands of experienced modelers, this software is an extremely powerful and valuable tool.  In the hands of an inexperienced modeler that merely loads data and manipulates the tool, the output could result in decisions that are financially and operationally crippling.  Here’s how an experienced strategic network modeler adds significant value:

1. Strategic Insight and Decision-Making:
   • An experienced supply chain modeler doesn’t just focus on the current setup of a distribution network; they consider long-term goals such as cost reduction, service level improvements, expansion plans, and risk mitigation. They have a holistic view of the entire supply chain and how changes in the network impact performance.
   • Knowing the software allows users to run scenarios but without the strategic perspective, they may not fully understand how to align these results with larger business objectives, such as balancing costs with service levels or supporting growth in new markets.

2. End-to-End Optimization:
   • A modeler can design an optimized distribution network by understanding trade-offs between different variables like transportation costs, warehouse locations, lead times, and inventory levels. They understand how changes in one part of the network affect the rest of the supply chain and can model different configurations to achieve the best overall performance.
   • Simply knowing the software means you can input data and run models, but without a deep understanding of how to configure these variables or make informed decisions based on the results, opportunities for optimization will likely be missed.

3. Scenario Analysis and Risk Management:
   • A strategic modeler can create various scenarios to account for uncertainties like demand variability, disruptions (e.g., natural disasters, supplier issues), or economic changes. They can simulate what-if scenarios and develop contingency plans for a resilient distribution network.
   • Software proficiency enables users to run these scenarios, but a modeler brings the critical thinking required to interpret the results in the context of risk mitigation and long-term strategy, providing insights on trade-offs and resilience.

4. Customization and Tailored Solutions:
   • Distribution network modelers understand that no two supply chains are identical. They can customize models to reflect specific operational constraints (e.g., geographic limitations, unique customer requirements, regulatory environments). They also tailor solutions to fit a company’s particular goals, such as minimizing environmental impact or improving speed to market.
   • Without this knowledge, someone who just knows the software may struggle to customize or interpret outputs in a meaningful way, often relying on default settings that may not capture the complexity of the real-world scenario.

5. Cross-Functional Collaboration:
   • A strategic network modeler often collaborates with other departments (e.g., procurement, logistics, finance) to align the network with overall business strategies. They understand how to balance multiple objectives, such as cost control and service level agreements (SLAs), and how changes in the distribution network can impact other business areas.
   • Just knowing the software doesn’t provide the cross-functional insight or the ability to communicate and align network decisions with broader business strategies.

6. Interpreting Data and Metrics:
   • A modeler goes beyond the output of the software to extract actionable insights. They understand the key metrics (e.g., total landed cost, order-to-delivery time, network resilience) and can interpret these to make informed recommendations about warehousing locations, transportation methods, and service levels.
   • Knowing the software enables users to generate metrics, but without the experience in interpreting them, it’s difficult to translate data into meaningful, strategic decisions.

7. Continuous Improvement and Adaptation:
   • Distribution networks are not static—they need to evolve with changing market conditions, customer demands, and technological advancements. A strategic network modeler is continually assessing and refining the network to ensure that it remains efficient and adaptable to future needs.
   • Those who know the software might be able to re-run models when needed, but without a forward-looking strategic mindset, they may struggle to keep the network agile in response to new challenges.

An experienced supply chain network modeler provides immense value by using deep knowledge and analytical expertise to align network design with long-term business goals, optimize performance, manage risks, and ensure scalability. In contrast, just knowing the software allows for technical operation but lacks the strategic thinking and expertise required to make impactful, data-driven decisions that enhance the overall efficiency and resilience of the distribution network.

—Dave Wheeler, St. Onge Company
 
 

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