Business Needs -- Why do I need to think about supply chain design?

Supply chains have become increasingly complex as companies attempt to simultaneously pursue sales growth and cost reduction. At the same time, supply chain design choices are exerting increasingly critical influences on strategic business outcomes. Poor choices for the supply chain can undo business strategy. 

Strategic supply chain design is especially important in mergers and acquisitions, and for initiatives such as customer-driven supply networks or integrated supply chains. Companies quickly discover that effective integration can be difficult because of the different drivers in various parts of the supply chain. Customer-driven supply networks mean increasing complexity with differentiated customer and channel requirements.

Leading companies have long realised that a large portion of supply chain costs and capabilities is actually decided during supply chain design. As dominant competitors, these companies recognise the significant role that supply chain design plays in supply chain strategy.

As a result, these leading companies are examining their supply networks more frequently, using modelling and analytics to decide how to launch new products, invest in capacity, and re-align capabilities of existing assets more efficiently as circumstances change. Modelling and analytics convert management information into issues, insights, and opportunities, and identify the best options across a range of strategic scenarios.

This longer term perspective of the "story behind the numbers" allows these companies to make better-informed decisions about strategic investments that will drive lower costs, improve supply chain effectiveness, provide sustainable competitive advantage and improve shareholder value. As a result, the gap in competitiveness between the best and the rest will get wider.

Many problems in the supply chain are caused by a tendency to make decisions locally in the interests of one functional area, or by oversimplification to look at one facility or product family in isolation, or by applying "rules of thumb" without full knowledge of their wider impact. In supply chain design, an integrated and holistic view of the supply chain allows key drivers to be understood and this allows trade-offs to be made intelligently. The result is more effective supply chain choices that are better aligned to deliver business strategy.