Using Modeling and Analytics to Design a Resilient Supply Chain
An optimized supply chain is not necessarily a resilient one. You can use modeling technology to accurately identify and quantify potential supply chain risks and their corresponding costs, and develop mitigation strategies through scenario optimization and advanced analytics to build resiliency into your operations.
What is Supply Chain Resiliency?
Supply chain resiliency focuses on designing your business and supply chain to quickly bounce back from disruptions. The goal is to improve your ability to recover from a disruption by identifying areas of potential risk, designing the supply chain to mitigate these risks, and maintaining living models of contingency plans for potential disruptive events.
Why Model Resiliency?
- 74% of businesses experienced at least one supply chain disruption in last 12 months
- 14% report cumulative losses of at least $1.08M in last 12 months
- 24% reported losses of at least $270,000 in last 12 months
- 58% reported a loss in productivity
- 38% reported a loss in revenue
Source: Business Continuity Institute Supply Chain Resilience Report 2015
Understanding the Resiliency of Your Network
Supply chain design technology enables businesses to build digital models of the end-toend supply chain to evaluate and compare dozens of scenarios side-by-side and test them under real-world variability for better decisions around site selection and product flows. There are four steps businesses can apply to understand and improve the resiliency of their supply chain network:
Assess: Use all modeling and analytics to identify areas of risk. You can use network design models, company KPIs and other metrics to get a holistic look at your supply chain.
Prioritize: Use the information from the assessment to prioritize scenarios to test further with optimization and simulation technology.
Analyze: Use sensitivity analysis and scenarios to test network designs that may increase resiliency, such as moving inventory to alternate locations or changing supplier relationships.
Plan: Develop strategies for resiliency-building supply chain changes based on scenario analyses, or develop contingency/response plans for potential disruptive events.
Ways to Evaluate Your Supply Chain Resiliency
Supply chain models put holistic, end-to-end views of the supply chain at the fingertips of supply chain practitioners. Having living digital supply chain models and analytics enables businesses to continuously optimize the end-to-end supply chain, rapidly test new strategies and react to changing market conditions.
Risk Exposure Summaries
These summaries are focused on providing high-level metrics for evaluating risk in the supply chain across multiple scenarios. Summarizing non-cost metrics such as average distance to customer, number of products per facility and single-sourced products or components can give insight into the ability of a network to recover from a disruption.
Risk Exposure Data Visualization
Many businesses struggle to collect the data and build reports that can make it easier to identify and assess areas of potential supply chain risk. Visualization tools linked with supply chain models give you quick, aggregated views of the supply chain whenever you need it. The example chart below shows how visualizing the data makes it easy to spot the potential risk of single-sourced products.
Simulate Supply Variability
How long is your whole network down if a critical site is down for an extended period of time? Simulation can be used to evaluate actual performance of different network designs over a period of time given these downtimes. This data can be viewed in time-series reports (example shown below) showing missed orders, inventory levels, total cost and more, as a critical way to evaluate resiliency. Evaluating the effect that each site has on the reliability of the entire network can uncover hidden areas of risk in the design.
Multi-Objective Optimization with Risk Data
Integrate supplier scorecard data, facility reliability, days of inventory and other factors into network optimization and build a trade-off curve to visualize the costs and benefits of different options.
Automation of Assessment and Prioritization
New technologies will enable businesses to automate the analysis of a disruption at each of the sites in their supply chain or to simulate numerous network designs’ ability to improve resiliency. Options like these can help companies focus their planning efforts only on the sites that are most critical to the reliability of their operations.
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 firstname.lastname@example.org or call 866-598-9831.