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Uncover Hidden Supply Chain Cost Savings Using Modeling Technology

by Toby Brzoznowski | insiderPROFILES, Volume 5, Issue 2

April 1, 2014

Supply Chain Modeling Technology

In this article, LLamasoft Executive Vice President Toby Brzoznowski discusses how supply chain modeling technologies such as production footprint analysis and product flow-path optimization help organizations uncover hidden supply chain cost savings.

 

Is there anything better than putting on last year’s jacket and finding money in the pocket? The money was right there, but hidden just below the surface. Much like that money in your coat, there are numerous supply chain cost saving opportunities hidden at most companies. Many of these businesses uncover this money by utilizing some or all of the supply chain modeling technologies:

  1. Product flow-path optimization
  2. Demand segmentation and inventory right-sizing
  3. Production footprint analysis
  4. Transportation route optimization

Each of these techniques can deliver fast, easy, and unexpected benefits. They are fast in that they do not require years to implement. They are easy because they do not require major structural changes to the supply chain. And they are unexpected because modeling technology often uncovers solutions that
contradict intuition or legacy business practice.

1. Product Flow-Path Optimization

The process of moving products from supply through production and eventually distributing them out to customers or stores presents myriad choices. Modeling all the alternative flow options and using smart algorithms to determine the best choice is called product flow-path optimization.

2. Demand Segmentation and Inventory Right-Sizing

Breakthrough technology for inventory modeling and policy design is now available, enabling companies to analyze and properly categorize demand, factor in all aspects of inventory for both existing and new supply chain structures, and simulate real-world behavior to enable true what-if capabilities. The result is a prescription for the right levels of working capital across continuously changing businesses.

3. Production Footprint Analysis

Download the complete guide to finding money in the supply chain: www.llamasoft.com/
whitepapers

Oftentimes demand for products shifts over time to new regions or different quantities, and suppliers and cost structures change as well. As these changes occur, the production footprint should change with them, which may mean investing in additional capacity in certain locations or perhaps completely moving production capacity to other facilities within the network. Modeling the production footprint and analyzing varying scenarios helps a company balance existing capacity with the investment required to add additional production.

4. Transportation Route Optimization

Transportation route optimization can be done alone or in conjunction with either supply chain optimization or simulation. Using advanced algorithms, transportation routes are defined to minimize the cost of inbound or outbound shipments, while considering realistic cost and constraint structures. This helps answer the questions, “What will happen to transportation routes when the network design changes?” or “Is there a more efficient way to get products from the manufacturer to the customer?”

Use Your SAP Data for Automated Model Building

Modeling technology can uncover millions of dollars in supply chain savings just by optimizing existing assets and processes. LLamasoft helps SAP customers fully leverage their SAP enterprise data with automated data connectors, enabling continuous supply chain optimization. So the question is: how much “hidden” money might be found in your company’s supply chain? 

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Toby Brzoznowski
Toby Brzoznowski

Toby Brzoznowski is Executive Vice President of LLamasoft, Inc. He has over 20 years of experience building and growing businesses, focusing on process improvement and analysis technologies. His expertise has been applied to bringing new and advanced technologies into mainstream use at global Fortune 500 businesses. In the last decade, Toby has been involved in the start up of three Michigan-based technology companies. He is a graduate of the University of Michigan and a frequent presenter at supply chain and strategic sourcing events.



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