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New Generation Network Design

  • 20th June 2016
  • Categories: News

The last two years have seen a quantum leap in the functionality and solving capability of supply chain modelling tools.

The main supply chain modelling providers have invested serious time and money developing more sophisticated tools that not only provide greater modelling capability but also provide more relevant linkages between strategic network/supply chain design and daily operations.

The traditional “silo” approach to network design projects was to conduct strategic reviews of logistics infrastructure every 3 to 5 years. This was typically focused on warehousing and/or transportation issues located in one region or country.

There is now a better way to do things. Today’s modelling tools allow for a far more comprehensive and inclusive look at all elements of the supply chain. A critical factor in the significant improvement in modelling capability has been use of 3 tier client server architecture. This has allowed for larger and more complex models to be built and solved in dramatically reduced time.

Today’s tools allow for more regular modelling interventions at a time frame suitable to your business (eg weekly, monthly, quarterly etc) and include additional key elements of the supply chain such as inventory, resources, taxes, exchange rates and even carbon.

The latest supply chain modelling tools now have the capability to;

Determine the optimal individual SKU flow through an optimally designed strategic supply chain network.


This is a major enhancement that can revolutionise the way an organisation sources, stores and distributes its inventory. Individual product flows can now be optimised through a supply chain. This is particularly advantageous when trying to determine the flows for new product lines or how new markets will be serviced. An organisation can now look at its entire inventory holding and determine the optimal way of getting each individual product to market. The potential for savings and efficiencies here is enormous.

Model over multiple time horizons to identify and determine changing inventory, infrastructure and resource requirements.


This is another major enhancement. Application of this functionality allows an organisation to determine the warehousing capacity requirements during the year. An example is the ability to account for the resource needs for the winter lows and the Christmas peaks. It also allows for an organisation to determine its inventory, warehousing and transportation requirements over say a five year period, ascertaining exactly, for example, when new facilities will be required.

Global end-to-end Supply Chain Optimisation

The latest modelling tools allow for sophisticated global networks to be optimised. Key global supply chain costs and components including exchange rates, tax rates and alternative transportation methods can be incorporated into a model to determine the best global network for an organisation. Global models can determine the optimal places of manufacture, points of export and import, inventory consolidation points and the optimal transportation configuration.

Create an optimal transport routing schedule from an optimally designed strategic supply chain network.


This is a major enhancement to the traditional network tool. It allows the user to take an optimally designed supply chain network and determine detailed vehicle requirements and routing plans to match that network. This is one of the key linkages from strategic planning to daily operations. It is a feature that adds considerable credibility and accuracy to any supply chain design project.

Determine the optimal mix of third party carriers, own fleet and multi-modal transport options by channel.


The new models can determine the optimal mix of transportation providers and modes. This is particularly useful in organisations that have seasonal peaks and troughs in demand. With the multi–period functionality the tools can determine an organisations base fleet requirement and when that needs to be supplemented with third party providers in times of peak demand.

The latest modelling tools are certainly very much superior to those that existed even a few years ago. Development continues both at a technical level to improve algorithm capability and solve times, and at a functionality level to increase the accuracy and detail to which the models can represent the real world. The focus is to continue to bridge the gap between strategic modelling and daily operations so as to ensure the relevance and accuracy of network modelling recommendations. For the supply chain professionals and other users of these tools, there is now the ability to produce more detailed and more accurate models that increasingly represent the real world. This can only enhance strategic and operational decision making and thereby ultimately improve an organisations financial performance.