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The Evolving Nature of Supply Chain Design

By Dan Kogan  July 20, 2016

A brief 10,000 years ago, humans were nomadic hunters and gatherers roaming to collect the materials they needed to survive.  Today, one can push a button on his or her smart device and practically anything can be delivered to one’s doorstep, perhaps within the same day.  Humans escaped the paradigm of being a product of their environment to one where they designed their environment.

Suffice it to say, we’ve evolved just a bit.

Much has happened in the past 10,000 years and a lot has changed as recently as the past 250 years. From our nomadic beginnings to the rush of trade via the Silk Road; from the Industrial Revolution to the assembly lines and mass production of the twentieth century and into the Information Age in which we find ourselves today, we continue to drive great innovation and efficiency through improved design and planning.

How did this happen?  One catalyst in humankind’s desire to engineer their environment is improved decision-making.  This is particularly evident within the modern supply chain where an abundance of data fuels an epic quest for perfect information.  Let’s establish a few definitions.

  • Data are a collection of individual facts, statistics, or items of information.
  • Information is data organized, structured, presented in a useful context.
  • Perfect information is a theoretical state where all inputs are known, enabling improved decision-making.

hand-apple-iphone-smartphone

Today, with the proliferation of smart devices and sensors which comprise the “Internet of Things,” there is no shortage of data.  In fact, the Information Age has democratized the creation of data and shaped an era of data production (consider the ‘data exhaust’ left behind from internet searches and online shopping).  Data is a raw material and, in many industries, fast becoming a commodity at that.  What is more pressing is the ability to sustainability convert data into information.  While this abundance of data can open up new insights to companies empowering them to make data-backed decisions, it can become overwhelming and time consuming to figure out how to take that data and transform it into useful information. Data cleansing and blending tools make that process significantly easier but companies then need to find the right supply chain technology to put these insights to action.

Add to that the fact that the risks that companies face seem to multiply by the day. External risks like natural disasters, taxes and duties and regulation, political unrest, and increased competition, to internal factors such as new product launches, mergers and acquisitions, and emerging geographic markets all place pressure on an organization’s ability to survive and compete. The pace of change is increasing and the world is becoming more interrelated and complex – and supply chain design is increasingly vital to thrive. Models, optimization, and simulation – and a team with the right capabilities to maximize the benefits of these tools – are required to see what lies around the bend in your supply chain network.

How organizations leverage supply chain modeling technology has also evolved. In the recent past companies would complete a project once a year to every other year to assess the current state of their supply chain network design, make a few tweaks and call it a day until the next cycle rolled around and instead focus on planning. This was fine and likely delivered some savings, but wasn’t optimal. The state of a business doesn’t change on an annual or bi-annual basis; rather, it changes nearly every day.

It reminds me of the presentation by LLamasoft President and CEO Don Hicks at our recent SummerCon supply chain design conference. Hicks offered examples of flawed design noting that “Design is so critically, important…No matter how hard you plan you are restricted by the design of the system.”

By adopting supply chain design on an ongoing basis, and approaching business through the lens of design-thinking, it grants companies greater agility and a more accurate look at their network allowing the design to constantly evolve. But don’t forget about the importance of supply chain planning. Planning to an inefficient design can render subpar results and the same thing can be said of design without planning. And a lack of design or planning can lead to a true catastrophe.

Employing design-thinking and a drive for innovation and improvement is what has gotten us this far today. What is the ‘missing link’ in your supply chain? Is it time for you to design your network instead of letting happenstance do it for you?