Skip to content
Search AI Powered

Latest Stories

techwatch

A network design is never done

For many companies, designing a supply chain has gone from a one-time project to an ongoing process. Here's why.

It used to be that businesses turned to supply chain network modeling for help answering specific questions. For instance, if a company wanted to determine how many distribution centers to retain after a corporate merger or whether it should open a new facility to support expansion into a foreign market, it would use network analysis software to weigh the pros and cons of various supply chain network configurations. This type of software is available from such vendors as Barloworld, IBM, Infor, JDA, LLamasoft, Profit Point, and Solvoyo, to name a few.

But today's business climate has become increasingly volatile, and companies are struggling to contain distribution costs and meet new customer demands. That's why more and more businesses are starting to recognize that their distribution network requires periodic modeling. In fact, a recent study of 60 companies conducted by the Tompkins Supply Chain Consortium found that the average length of time between network design studies has dropped from 24 to 18 months. "Designing a supply chain is no longer something you do just once," says Toby Brzoznowski, an executive vice president at LLamasoft. "We're seeing design as being a process as opposed to a project."


How can companies benefit from regular distribution network modeling? For one thing, periodic evaluations can help a business assess whether its network design remains optimal despite changing inventory or customer requirements. For example, if customer demand is starting to shift, say to another region of the country or another part of the world, a network analysis can help the organization evaluate whether its distribution centers are still situated to serve customers at the lowest transportation cost. Or if customers are increasingly ordering merchandise online rather than buying from stores, the software can help a company decide whether it should be adding DCs to fulfill those online orders.

Along with changing customer demands, a company may also be dealing with changes to its supplier mix. For example, perhaps the organization has recently switched to a new supplier or expanded its supplier base in a bid to cut procurement costs. While that may hold down sourcing expenses, it can have an adverse effect on landed costs. A network analysis might identify ways to reconfigure the distribution network to keep inbound transportation costs low.

Volatile oil prices remain a nagging worry for logistics managers, prompting a number of them to get serious about contingency planning. Conducting a distribution network modeling exercise can help a company prepare a plan to modify the distribution network—perhaps moving DCs closer to customers—to keep down transportation costs in the event of a spike in fuel costs.

It's not just oil prices that are forcing a network re-examination. To curb overall costs, many companies are seeking closer integration between manufacturing and distribution, which may require consolidation or relocation of facilities. Alan Kosansky, president of Profit Point Inc., notes that many manufacturers are asking the question, "Given our manufacturing footprint, what's the best way for us to deliver our products to our customers?"

Because distribution networks are based on assumptions about current customers, markets, inventory needs, and distribution costs, volatility often changes the game, forcing companies to reassess their operations. In a world where assumptions can no longer be taken for granted, a distribution network for today might look very different from one for tomorrow.

The Latest

More Stories

legal scales and gavel

FMCSA rule would require greater broker transparency

A move by federal regulators to reinforce requirements for broker transparency in freight transactions is stirring debate among transportation groups, after the Federal Motor Carrier Safety Administration (FMCSA) published a “notice of proposed rulemaking” this week.

According to FMCSA, its draft rule would strive to make broker transparency more common, requiring greater sharing of the material information necessary for transportation industry parties to make informed business decisions and to support the efficient resolution of disputes.

Keep ReadingShow less

Featured

pickle robot unloading truck

Pickle Robot lands $50 million in VC for truck-unloading robots

The truck unloading automation provider Pickle Robot Co. today said it has raised $50 million in venture capital and will use the money to accelerate the development of new feature sets and build out the company’s commercial teams to unlock new markets and geographies.

The “series B” funding round was financed by an unnamed “strategic customer” as well as Teradyne Robotics Ventures, Toyota Ventures, Ranpak, Third Kind Venture Capital, One Madison Group, Hyperplane, Catapult Ventures, and others.

Keep ReadingShow less
chart of trucking conditions

FTR: Trucking sector outlook is bright for a two-year horizon

The trucking freight market is still on course to rebound from a two-year recession despite stumbling in September, according to the latest assessment by transportation industry analysis group FTR.

Bloomington, Indiana-based FTR said its Trucking Conditions Index declined in September to -2.47 from -1.39 in August as weakness in the principal freight dynamics – freight rates, utilization, and volume – offset lower fuel costs and slightly less unfavorable financing costs.

Keep ReadingShow less
chart of robot use in factories by country

Global robot density in factories has doubled in 7 years

Global robot density in factories has doubled in seven years, according to the “World Robotics 2024 report,” presented by the International Federation of Robotics (IFR).

Specifically, the new global average robot density has reached a record 162 units per 10,000 employees in 2023, which is more than double the mark of 74 units measured seven years ago.

Keep ReadingShow less
person using AI at a laptop

Gartner: GenAI set to impact procurement processes

Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.

Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.

Keep ReadingShow less