The Supply Chain Leadership Forum 2011: Walt Disney World® Resort, Lake Buena Vista, FL
Optimizing Supply Chain Networks John Kester, VP, Customer Service & Product Supply, MillerCoors, Lee Beard, VP, Logistics, Coca-Cola, & Brian Hudock, Partner, Tompkins Associates
Session Scope This Session Will Focus On: • • • •
Introduction Distribution network trends Network risks and goals Discussion
Copyright © 2011 Tompkins Supply Chain Consortium. All rights reserved. www.supplychainconsortium.com
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Introduction Optimizing Supply Chain Networks • Most companies have considerable interest in supply chain networks due to the significant cost and service factors that are impacted by their network design. • This years data indicates there have been significant changing trends in network design. • This presentation will focus on Consortium data trends and provide highlights for discussion.
Copyright © 2011 Tompkins Supply Chain Consortium. All rights reserved. www.supplychainconsortium.com
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Distribution Network Trends Network Level of Optimization Very inefficient: Significant changes are needed Inefficient: Small changes could be justified Not optimized, but insufficient to change Close to optimized Optimized 0%
10%
20%
30%
40%
50%
60%
Percentage of Respondents
Copyright © 2011 Tompkins Supply Chain Consortium. All rights reserved. www.supplychainconsortium.com
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Distribution Network Trends Use of Inside or Outside Resources • More than half (53%) of the respondents use outside resources when performing a network study. • There is a slight trend toward more companies using outside resources for network studies. • This is believed to be the result of limited internal resources and more complex supply chain networks. Copyright © 2011 Tompkins Supply Chain Consortium. All rights reserved. www.supplychainconsortium.com
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Distribution Network Trends Network Planning Horizon • The average planning horizon is 4.6 years, with the range being from 2 to 15 years. • There is a significant trend toward reducing the planning horizon used for network studies; 2011 data shows less than a 4-year planning horizon is often used.
Copyright © 2011 Tompkins Supply Chain Consortium. All rights reserved. www.supplychainconsortium.com
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Distribution Network Trends Time-Based or Event-Based Network Design? • The trend is toward more event-based network planning activity, either in anticipation of an event (such as a merger) or after the event. • Over the past two years, the length of time between network studies has dropped from 2 years to 18 months. • This points to the complexity of today’s supply chain networks and a fast-changing business environment.
Copyright © 2011 Tompkins Supply Chain Consortium. All rights reserved. www.supplychainconsortium.com
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Distribution Network Trends Network Design Tools • More than two-thirds (68%) of respondents use some form of automated tool to perform network analysis. • Since 2006, there has been little change in this percentage. • Today’s network design solutions are more likely to be simulation-based studies than ever before, and the complexity of the models have greatly increased over time.
Copyright © 2011 Tompkins Supply Chain Consortium. All rights reserved. www.supplychainconsortium.com
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Distribution Network Trends Network Design Tools • Most network design tools are completed with purchased software, whether by internal resources or outside help. • Few companies are using in-house developed tools at this point, as the models have grown more dependent on sophisticated algorithms and extensive data requirements.
Copyright © 2011 Tompkins Supply Chain Consortium. All rights reserved. www.supplychainconsortium.com
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Distribution Network Trends Meeting Planning Requirements • Today’s network tools meet most of the requirements that are placed on the design process, but overall, users are not as satisfied with the solutions today a they were two years ago. • Two years ago 31% of respondents were satisfied that the tools met all their requirements, versus 8% today. • This likely has something to do with the sophisticated tools analyzing complex networks.
Copyright © 2011 Tompkins Supply Chain Consortium. All rights reserved. www.supplychainconsortium.com
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Network Risks and Goals Network Consideration of Risks • Overall risk factors to networks are still not strongly considered in network design studies. However, the data clearly indicates that risk factors are more a part of network analysis than ever before. • Labor disruptions are at the top of the list of risk issues considered in network analysis, followed by weak links in the supply chain and capacity shortages.
Copyright © 2011 Tompkins Supply Chain Consortium. All rights reserved. www.supplychainconsortium.com
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Network Risks and Goals Network Optimization Goals • Cost minimization is the top priority of almost all companies performing a network analysis. • Cost is followed by the goals of customer service improvement and minimizing capital outlay. • The trend is toward designs that greatly reduce costs, as well as meet customer service needs and can be achieved quickly with available assets or through outsourcing. Copyright © 2011 Tompkins Supply Chain Consortium. All rights reserved. www.supplychainconsortium.com
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The Supply Chain Leadership Forum 2011: Walt Disney World® Resort, Lake Buena Vista, FL
Discussion
