Executive Briefings

Supply-Chain Design: A 'Must-Have' Business Function

Toby Brzoznowski, executive vice president of LLamasoft Inc., details the changes he's seen in supply-chain modeling and network design over the last 15 years. And he offers a picture of where the technology and supporting business processes are going.

The biggest recent change in supply-chain modeling and design is the shift over the last 10 years from a focus on single projects to a business process “that fits alongside planning and execution,” says Brzoznowski. The pace of change, driven by growing volatility in markets, has forced companies continually to redesign their supply chains in order to remain competitive. Other factors influencing change include SKU proliferation, mergers and acquisitions, and evolving e-commerce strategies.

To address these challenges, companies are taking a more holistic view of their operations. They are bringing together multiple disciplines, covering such activities as inventory management, transportation route design and overall product flow. Advances in information technology over the past few years have made it possible to model supply chains “at the end-to-end, operational level of detail,” Brzoznowski says.

In addition to the right technology, companies must help their people learn how to model. “They need to build this up as a business process that’s supported from the executive level down,” says Brzoznowski says. “[Supply-chain] design is not a black box that makes decisions for you, it’s a technology that enables people to make better decisions, and try different scenarios. You have to enable people so executives know the right questions.”

The use of “what-if” scenarios is crucial to determining the optimal path. The ever-increasing memory capacity of chips and computers allows for modeling at the SKU level, not just by product category. In addition, cloud-based computing can help companies to engage in such activities as demand forecasting and labor costing, while sifting through hundreds of possible scenarios.

“It takes weeks to run those on my server,” says Brzoznowski, “but cloud-based computing makes it possible to run all of those simultaneously. You can immediately compare the results.”

To view the video in its entirety, click here

The biggest recent change in supply-chain modeling and design is the shift over the last 10 years from a focus on single projects to a business process “that fits alongside planning and execution,” says Brzoznowski. The pace of change, driven by growing volatility in markets, has forced companies continually to redesign their supply chains in order to remain competitive. Other factors influencing change include SKU proliferation, mergers and acquisitions, and evolving e-commerce strategies.

To address these challenges, companies are taking a more holistic view of their operations. They are bringing together multiple disciplines, covering such activities as inventory management, transportation route design and overall product flow. Advances in information technology over the past few years have made it possible to model supply chains “at the end-to-end, operational level of detail,” Brzoznowski says.

In addition to the right technology, companies must help their people learn how to model. “They need to build this up as a business process that’s supported from the executive level down,” says Brzoznowski says. “[Supply-chain] design is not a black box that makes decisions for you, it’s a technology that enables people to make better decisions, and try different scenarios. You have to enable people so executives know the right questions.”

The use of “what-if” scenarios is crucial to determining the optimal path. The ever-increasing memory capacity of chips and computers allows for modeling at the SKU level, not just by product category. In addition, cloud-based computing can help companies to engage in such activities as demand forecasting and labor costing, while sifting through hundreds of possible scenarios.

“It takes weeks to run those on my server,” says Brzoznowski, “but cloud-based computing makes it possible to run all of those simultaneously. You can immediately compare the results.”

To view the video in its entirety, click here