Supply chains face constantly changing frameworks, from the demand they need to serve to cost structures to changing technologies. Supply Chain Network Design is key to continuously replan your supply chain at the strategic and tactical level and stay competitive. Supply Chain Network Design software is essential to perform the replanning tasks optimally.
Because there is money on the table. According to Invesp, businesses with optimized supply chains hold beyond 50% less inventory and operate with an up to 15% lower cost base than their peers.
Supply Chain Network Design software, sometimes also called supply chain (network) modeling software, comes in several forms. While entry-level solutions integrate into your local Microsoft Excel application and allow individuals to do very basic analyses, the most advanced solutions are provided as cloud-native Software-as-a-Service (SaaS) platforms and enable the collaboration of larger groups of individuals.
Hereby, we at Sophus want to provide you with a simple guide to decide what type of Supply Chain Network Design software you should look for to best meet your needs.
The process should start with your self-assessment of your business requirements.
- How large and complex is your supply chain?
- What does our supply chain network look like today?
- What are the main challenges in your supply chain? Are you dealing with high inventory turnover? Is network redundancy a concern? Or are you focused on reducing high logistics costs?
- What are your biggest planning pain points at the strategic and tactical level?
- Are there strategic initiatives like rapid growth, M&A activities
The aspects to differentiate the offerings on the market can be listed as follows.
Algorithmic Capabilities
There are two basic capabilities to look for.
- One is the so-called Greenfield Analysis, with which the most optimal (i.e. closest to demand) location of sites on the map is determined.
- The other is Network Optimization, which is the capability to determine flows and allocations of products from suppliers to factories,factories to DCs , factories/DCs to customers in a capacity-constrained network, by solving for different objectives (like maximizing profits, minimizing costs or maximizing revenue).
However, there are other useful algorithmic capabilities that are often very important enhancement to network modeling analyses or sometimes can be treated individually as well to tackle specific business problems.
Typical ones are:
- Transport Optimization, with which optimal inbound pick-ups and outbound milk run deliveries routes are being generated. .
- Inventory Optimization, with which defines what products (e.g. raw material, intermediary product, finished goods) to be stocked at which location and how much to be stocked.across a multi-echelon network of nodes..
- Order Assignment, with which the optimal allocation of customer orders to shipments is determined by considering cost and service trade-offs.
- Mode Optimization, helps to address the optimal mode to be used in a shorter time bucket, trade off between using FTL, LTL, multi-stop routes and different other modes of transportation.
- Network Paths, with which the costs (and carbon emissions) of the network are calculated at the lowest level of detail, and that the cost of every process step in the end-to-end supply chain to serve a customer with a product is made transparent.
- Discrete Event Simulation, with which optimal supply chain structures determined through the other exercises mentioned above can be tested with historical transactional data or future projected orders for detailed performance.
- Demand forecasting, with which future demand can be estimated by leveraging historical data, promotional plans, special events, product lifecycle and substitutions, using AI and Machine learning technologies.
Ease of Use
The ease of use of Supply Chain Network Design software can be viewed from four perspectives.
One is the simplicity of the structure of the software, like its user interface (UI) design, response time of the UI, the process to create scenarios in model and other aspects related to the interaction of users with the software.
The second is the ease of validating the data used for modeling and finding errors when there is indeed inconsistency or model infeasibility. Optimization algorithms are unforgiving on incomplete, erroneous or logically inconsistent data and may generate illogical or even no results, or sometimes get into a status called ‘model infeasible’.
That’s why often in a supply chain network design project team often spend more than 70% of the project time on data cleaning and model infeasibility issues. Therefore, the ability of the software to accurately and rapidly point such issues out to its users while “building” the models is essential for efficiency.
The third perspective is the ability to let multiple users collaborate on the work. This includes, but not limited to, capabilities like sharing models between users, several users accessing the same model, creating dashboards for users to interact with models and review results.
The fourth and final perspective is the scalability of the solution. While the underlying mathematics are mostly the same across the solutions, the ability to solve large and complex models and the speed with which this is being done differs significantly.
Technical Foundation
As mentioned before, Supply Chain Network Design software can be anything from a locally installed, simple desktop application all the way to a true cloud-native SaaS platform built for enterprise scale use and performance.
As Optimization algorithms can be resource-intensive, you should consider if the use cases you want to address with your Supply Chain Network Design modeling would require the software to be able to utilize large-scale computing resources dynamically, or whether a simpler, local solution that runs on the CPU of your workstation would suffice.
Further, Supply Chain Network Design typically requires processing of large amounts of data. Hence, the programming language, database and data transfer technologies being used within the software will be other factors that will influence the performance of your models significantly.
Therefore, choose a software with a good technical foundation that supports scalability and provides optimal or near-optimal solutions within reasonable time frames.
As part of these considerations, also inquire whether modern data protection measures and procedural standards are being fulfilled. Typically companies who fulfill such standards possess internationally accredited certifications thereto. Finally, depending on your IT strategy, evaluate whether the solution provides multiple deployment options (e.g. public cloud, private cloud, on-premise).
Data and Deployment Options
Supply chain network design or modeling sometimes involves handling sensitive data, such as customer and supplier locations, supply chain costs, and manufacturing recipes or bills of materials. For this reason, it’s essential to select software with strong data security measures. Look for vendors that adhere to recognized industry standards like ISO 27001 or SOC2.
Some businesses have stringent security or compliance requirements, which may lead them to avoid using publicly hosted SaaS solutions provided by software vendors. Instead, they might prefer to manage cloud hosting themselves. In such cases, consider software that offers on-premise deployment options. This allows businesses to host the software in a cloud environment they control, significantly simplifying compliance efforts.
Other Functional Capabilities
There are various other functional capabilities, partially also related to the algorithmic capabilities mentioned previously, that Supply Chain Network Design software may offer.
A couple examples to mention are the ability to determine the carbon footprint of your supply chain and optimize (i.e. minimize) it or the ability to flex the constraints that influence the behavior of the models, so that the bottlenecks of the supply chain network can be analyzed effectively.
There is a long list of detailed capabilities in each of the abovementioned Algorithmic and Functional Capabilities that differentiate software further from each other.
Optimize Your Supply Chain Network Design with Sophus X!
Ready to streamline your operations, reduce costs, and gain a competitive edge? Look no further than Sophus X, the leading provider of next-generation supply chain network design software.
Sophus X’s powerful suite of tools goes beyond network optimization but also offers features like:
Sophus X offers advanced modeling capabilities to create customized models tailored to your specific business needs.
Use sophisticated optimization algorithms to identify efficient, cost-effective, and sustainable network designs.
Use real-time data integration and scenario analysis to make informed decisions and prepare for unforeseen challenges.
Enjoy diverse visualization tools and interactive reporting features to gain deeper insights into your supply chain performance.
Sophus X understands that every business is unique. That’s why they offer a variety of solutions to fit your specific needs. Whether you’re a small business just starting or a large enterprise with complex operations, Sophus X has the tools you need to take your supply chain to the next level.
Visit Sophus X today to learn more or request a demo!
