Supply Chain Design for the High-Tech Industry

LLamasoft Customer Example
When a catastrophic flood occurred, a hard-drive manufacturer’s primary supplier was crippled, eliminating capacity for weeks. Utilizing current supply chain models, they quickly ran scenarios to determine, given lead time, when they would stock out and which alternative methods of servicing customers would be optimal. The company was able to rapidly provide these alternatives, with associated costs, to customers, thereby avoiding uncertainty and protracted delivery delays–and identified $66 million in annual savings.

LLamasoft Customer Example
A leading provder of IT storage hardware utilized network optimization in LLamasoft Supply Chain Guru to help reevaluate its offshoring versus near-shoring strategy. The company was able to analyze the potential cost and service impact moving manufacturing back to geographies where their customers are located and away from centralized solutions in low-cost regions in Asia and elsewhere.

LLamasoft Customer Example
A high-tech company had used offshore contract manufacturing facilities in coastal China for the first 15 years of its existence. When the manufacturer insisted that a move to inland manufacturing facilities was required to keep costs down, the company decided to take a detailed look at alternate sourcing scenarios. A move inland would yield lower labor costs, but it would also increase lead time and add an additional transportation leg. Of course, there was no guarantee that if the company moved inland, labor costs wouldn’t rise there too. At what point would this no longer be a good sourcing decision? By running sensitivity analyses that considered not only labor rates but also fuel costs and other duties and tariffs, the company was able to accurately evaluate the Chinese location against other possible sourcing regions such as Latin America and Mexico.

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Supply Chain Design for the High-Tech Industry

LLamasoft enables companies to model, optimize and analyze supply chain and transportation network operations, leading to major improvements in cost, service, sustainability and risk mitigation.

Using Supply Chain Design Technology to Tackle High-Tech Industry Challenges

Off-shoring vs. near-shoring—what’s the best choice? Many companies are reevaluating off-shoring decisions using LLamasoft Supply Chain Guru. Though analysis of the tradeoffs between cost and service levels associated with alternative scenarios, companies can make intelligent decisions about sourcing and manufacturing products in the best location to handle market demand.

Right-size inventory to meet desired service levels at lowest possible cost. LLamasoft Supply Chain Guru inventory optimization gives companies a way to lower working capital while increasing service levels. This is achieved by applying better-fitting inventory curves on demand in order to “right-size” inventory levels across echelons.

What’s the best way to get products to market? Sometimes relocating manufacturing and distribution facilities through network design is not a realistic option. For these companies, finding the most efficient way to get products to market is the key. Air or ocean? Direct distribution or through hubs? Should I use cross-docking? LLamasoft enables companies to confidently answer these and myriad other questions using modeling and scenario analyses.
Service coverage map showing areas reachable within 1, 2, 3 and more days from each distribution center

What is the optimal postponement strategy? Many high-tech products have multiple levels of assembly. LLamasoft can help companies ascertain the best location and stage to transform products using postponement strategies, including optimal transportation frequency and mode combination in order to meet service levels at lowest possible cost.

Supply chain risk management and contingency planning is a key application of supply chain design. LLamasoft modeling technology enables companies to create living models of the end-to-end supply chain to mitigate risks by visualizing current inefficiencies, analyze the impact of changes to the supply chain through scenario analysis, and be able to react quickly and intelligently to unplanned events such as fires or floods. LLamasoft also offers a variety of global risk indices to help companies understand and predict the likelihood of supply chain disturbances.

Optimized Network without Tax Considerations
Tax Efficient Network
Optimize for tax/duties in order to better understand and predict manufacturing and distribution costs in different regions.

New product introductions—how do we determine the best geographies and timing? High-tech companies are continually introducing new products and opening new regions for sales and distribution. Through demand analysis and network optimization, LLamasoft can help determine the optimal launch plan. A cost comparison model can be used as sourcing decision tool whenever a new product is introduced, helping to determine optimal sourcing and subassembly locations.

Should we consider multi-channel distribution? And if so, how do you execute it? LLamasoft supply chain design solutions such as network optimization can help identify strategies for improving sourcing and transportation strategy based on required service constraints. Understand how to manage channels such as retail, wholesale distribution, e-commerce, OEM and third-party channels in order to minimize overall costs while meeting unique demands in each channel. In addition, supply chain inventory optimization can provide a full inventory plan that includes optimal safety stock, cycle stock and pre-build inventory.

Long-term capacity planning—seasonality, promotions, and other influences on product demand can place stress on production schedules and overall capacity. Using production modeling, companies can regularly review demand forecasts as the information becomes available so that they can best balance limited production capacity with demand volumes that often exceed this capacity. This requires production strategies such as pre-building of goods or pre-positioning of inventory for certain products so that capacity remains available for the most critical items.

Supply Chain Design Strategies for High-Tech Companies

LLamasoft customers often identify 10 to 20 percent cost savings while maintaining or improving customer service levels through strategic supply chain design projects including:
Supply Chain Network Design • Transportation Network Design • Inventory
Optimization • Flow-Path Optimization • Long Term Capacity Planning • Inbound
Consolidation • Greenfield Analysis • Cost-to-Serve Optimization • Merger and
Acquisition Rationalization • Risk Analysis and Contingency Planning

LLamasoft Is Here to Help

LLamasoft is dedicated to helping businesses build optimized supply chains that help them thrive even in changing market conditions. Partnering with LLamasoft ensures you’ll have more than just software and technical support, but a growing community of supply chain design practitioners, workshops, training and coaching to guide you as you progress. To learn more, email or call 866-598-9831.

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