A new report on supply network optimization, geared toward asset-oriented manufacturing sectors such as chemicals, metals and paper/pulp, has been published by IDC Manufacturing Insights. "We believe complexity in this segment's greater supply chain, including production, can be well served by supply network optimization (SNO)," says Kimberly Knickle of IDC. Network optimization tools are not limited to asset-heavy manufacturers, however. "Optimization tools will play a significant role in 2010 as global economies slowly recover and companies look to survive and to position themselves for the inevitable recovery," she says. Most of the use cases in the report can apply to many types of manufacturers, she says.

The report, Best Practices: Supply Network Optimization in Asset-Oriented Value Chains, answers a number of questions prevalent in many industries about how to plan, position and allocate inventory. Many of these questions are particularly relevant given the economic conditions of the last 18 months, says Knickle. "As companies have been forced to re-look at their business models due to declining sales and/or profits, the supply network is an obvious candidate for transformation. Having sophisticated tools may well make the difference between riding out the economic downturn versus becoming a victim of it."

The report also addresses two other key issues: sustainability and risk. "We believe supply network optimization should be one means of reviewing the supply chain to improve its environmental sustainability," says Knickle. Additionally, SNO can give asset-oriented manufacturers a better view into the inherent supply and supplier risks of a particular network and enable informed trade-offs, she says. "The most important element is that manufacturers understand their risk exposure even if, at the end of the day, they decide mitigation is neither warranted nor justified."

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