Modern supply chain networks
Modern supply chains are complex networks of resources, people, and companies that are
involved in the production and delivery of a product to the customer. From raw materials to the end-product
and final buyer, many steps need to be orchestrated within a given time and while
coordinating several stakeholders.
In today’s global market, supply chain networks can span across different countries and continents, supplying
goods to a multitude of customers. It goes without saying that in such an intricate web of producers,
suppliers, and couriers supply chain management is key to ensuring the journey of goods
runs according to plan and customers get what they want and when they want it.
Supply chain management
People working in the sector know that managing market demand and constraints (time, human
resources, infrastructures, stocks, etc.) can be extremely challenging. If one single link breaks, such as a
truck breaking down or an electrical blackout in a warehouse, it affects the entire chain.
But firefighting is actually the condition in which supply chain managers work every day
because, even if nothing breaks, there are always new orders or last-minute deliveries that
need to be factored into the planning.
The last couple of years has been particularly difficult as global disruptions have to be managed on top of daily smaller
disruptions. “Disruptions are the new normal” is what we hear from supply chain experts
more and more.
First, the Covid-19 pandemic and, later, the war in Ukraine have caused serious damage to Western logistics,
which had to face (and still is facing) several difficulties, from a lack of raw materials to driver
shortages and rises in fuel and energy prices. In 2021 alone, supply chain disruptions increased by 88%.
Supply chains are therefore seeking solutions to increase their resilience, enabling them to
react to ever-changing circumstances and allowing the continuity of operations and services. That is where
supply chain optimization can lend a helping hand.
Supply chain optimization process
A successful supply chain optimization process includes three different stages and a mix of various
optimization techniques.
Supply chain design:
The phase involves strategic decisions related to the supply chain’s network design, such as
the location of warehouses, the choice of suppliers, and the product flows to and from suppliers and buyers.
Supply chain planning:
The purpose of this phase is to balance demand and supply by creating a well-crafted
deployment plan. It includes techniques such as the combination of demand forecasting and inventory
management, to best prepare for future market requirements.
Supply chain execution:
This focuses on the day-to-day roll-out of the supply chain plan. It includes activities
from tracking inventory levels to executing orders, from picking goods to truck loading and sending
shipments.
It’s the execution phase that deals with those everyday challenges and sudden changes we have spoken about
before, which require prompt adjustments to the plan. Let’s see an example of a data-driven optimization
solution designed for this specific phase.
Transport optimizer: an example of data-driven optimization
Rulex Axellerate is our in-house optimizer for supply chain transportation.
This area of logistics refers to the movement of products from one location to another, involving the
orchestration of a variety of places (warehouses, distribution centers, retailer shops, final customers’
doorstep), stakeholders (planners, distribution center staff, couriers), and resources (stocks, pallets,
trucks, and other transport methods).
Rulex Axellerate creates the optimum transportation plan for every single day within a required
planning horizon, dealing with thousands of shipments and multiple constraints at the same time
(vehicle/route limitations; distribution center opening days; available docking bays, etc.). Moreover, Rulex
Axellerate can factor in new orders and disruptions, producing brand-new optimum schedules
for the current and following days in minutes.
Benefits:
Better and proactive planning means that shipments can be managed more efficiently bringing a series of great
benefits:
-
Enhanced service levels: reducing delays increases customer satisfaction and brand
reputation. -
Increased profits: advanced delivery programs reduce the risk of penalties and allow to
negotiate better deals with couriers -
Improved working conditions: avoid planner burnout, by removing stressful manual
planning and constant firefighting. -
Reduced fuel costs and C02 emissions: optimizing truck loads makes it possible to use
fewer trucks and so less fuel. On this topic see our on-demand webinar “The logistics’ green challenge”.
Choosing the right data-driven optimization software
As we saw, data-driven optimization can be particularly helpful in offering tools for improving the
management of supply chain operations. However, how do supply chains choose the software that
is most suitable for their business? We have collected some best practices from the several productive
discussions we had with our clients in the sector:
1. Focus on business needs
Always choose the technology that can adapt to your supply chain needs. Ask questions about
the scalability and flexibility of the solution, as you need a technology that can be quickly customized to
the changing circumstances of your supply chain and is able to grow together with you.
2. Value human-centric technology
Disruptive software will not do any good to your supply chain if it is not easy to understand. To achieve
real empowerment of managers and planners, supply chains must opt for a technology that is
user-friendly and clear to non-technical profiles, with transparent processes and results.
3. Start from top-quality data
Supply chains may have the best technology at their side, but if they feed it with low-quality master data,
it will not take them anywhere, if not to fictitious stockouts, distributions, delays, and penalties.
Conscious of this issue, we have empowered our clients with tools to improve data quality, including a
data-driven solution, Rulex RDC, which can quickly improve the quality of master
data, reaching 100% accuracy in minutes.
To know more about data-driven optimization, and to see for yourself how it can benefit your supply chain,
visit our supply chain page.
