SEARCH searchBY TOPIC
right_division Green SCM Distribution
Bookmark us
sitemap
SCDigest Logo

SCDigest Expert Insight: Supply Chain by Design

About the Author

Dr. Michael Watson, one of the industry’s foremost experts on supply chain network design and advanced analytics, is a columnist and subject matter expert (SME) for Supply Chain Digest.

Dr. Watson, of Northwestern University, was the lead author of the just released book Supply Chain Network Design, co-authored with Sara Lewis, Peter Cacioppi, and Jay Jayaraman, all of IBM. (See Supply Chain Network Design – the Book.)

Prior to his current role at Northwestern, Watson was a key manager in IBM's network optimization group. In addition to his roles at IBM and now at Northwestern, Watson is director of The Optimization and Analytics Group.

By Dr. Michael Watson

January 8, 2012


Top Five Models You Should Build in 2013

Don’t Be Intimidated by Network Modeling – To Get Started, Here are Five Easily Built Models that Will give You Insight


As a New Year’s Resolution, you should build a model of your supply chain.

You probably know the reasons why you should do this. However, what ends up stopping a lot of people from modeling their supply chain doing it is that they think it will be too hard, complicated, and time consuming.

To help you keep your resolution, here are five simple, yet valuable, models you can build.

Dr. Watson Says:

start
You can learn a lot from simple models.
close
What Do You Say?



Click Here to Send Us Your Comments
feedback
Click Here to See Reader Feedback

#1. Plot your demand on a map. As easy thing you can do is to plot your demand on a map. Don’t do anything fancy. Just add up the total annual demand for each 5-digit zip code and then plot it on the map. If you have other data readily like the channel (your store or the customer’s home), the mode (rail or truck), or maybe the product category, you should also include this.

Once you put this data into a map, play around with it and see what you can discover. I would guess you will learn something about your supply chain.

As an example, I loaded some sample demand data into Public Tableau and created the following map. It shows the relative demand of each zip code (by the size of the bubble) and the transit time from Chicago (dark blue is 1 day and the dark red is 4 days). If you click on the map, it will take you to an interactive version of this map so you can see this data for yourself.




#2. Add the current lanes you are using to serve your customers. Another good model is to plot your current lanes. To keep it simple, don’t worry about different products, just look at the total weight moving from point A to B in your supply chain (you likely have this data in a transportation file). Often, this exercise alone allows you see your data in a different way and may uncover some potential for savings.


Columns by Dr. Watson

Supply Chain by Design: Service Level Measures in the Supply Chain, Part 2

Supply Chain by Design: Service Level Measures in the Supply Chain

Supply Chain by Design: Nike's Phil Knight on the Importance of Supply Chain

Supply Chain by Design: Four Lessons from Hau Lee's Green Car Story Updated for the Era of Machine Learning

Supply Chain by Design: Profitability of Your Assets Depends on how you use Them

Supply Chain by Design: The Most Overlooked and Underestimated Data in Supply Chain Design

Supply Chain by Design: Self Driving Trucks May Create New Roles and New Types of Jobs

Supply Chain by Design: Why Driverless Trucks May Create the Need for More Drivers

Supply Chain by Design: A Non Obvious Way Self Driving Trucks May Impact Your Network Design Strategy

Supply Chain by Design: How You Should be Using Multi-Echelon Inventory Tools

Supply Chain by Design: You Don't Need the Optimization in Multi-Echelon Inventory Optimization

Supply Chain by Design: On Network Modeling - Blaspheming the Baseline

Supply Chain by Design: Profit Maximization Feature and Amazon’s Focus on Lead Time to Grow Revenue

Supply Chain by Design: Using Profit Maximization to Minimize Cost

Supply Chain by Design: Two Big Reasons You Don't Want to Maximize Profit in your Supply Chain Model

Supply Chain by Design: You Can Set Inventory Levels and Other Such Myths

Supply Chain by Design: Six Organizational Issues in Tactical Inventory Planning

Supply Chain by Design: Four Things Nick Saban Can Teach us About Inventory Planning

Supply Chain by Design: Seven Ways You Can Think About Christmas Capacity to Avoid Having the Press Blame Your Supply Chain for Missed Deliveries

Supply Chain by Design: Machine Learning and High Quality Potato Chips

Supply Chain by Design: Simple Models to Solve Complex Fast Delivery Problems

Supply Chain by Design: CSCMP Report - Five Take-Aways on Natural Gas Trucks from the AB InBev and Owens Corning Talk

Supply Chain by Design: CSCMP Report - Six Insights from LLamasoft and JLL

Supply Chain by Design: CSCMP Report - Five Supply Chain Design Lessons from Benjamin Moore and How One is Used by Amazon in their 1-hour Delivery Service

Supply Chain by Design: CSCMP Report - Two Supply Chain Design Lessons from Starbucks CEO

Supply Chain by Design: Four Groups that Need to Step Up to Help Make Network Design More of a Profession

Supply Chain by Design: Top Four Best Practices for Multi-Objective Optimization

Supply Chain by Design: Caesars Entertainment's Customer Data is Worth $1B - How Much is Your Supply Chain Data Worth?

Supply Chain by Design: Using Transactional Data to Estimate Truckload Market Conditions in Near-Real-Time

Supply Chain by Design: Routing Optimization is Hard: Lessons from UPS

Supply Chain by Design: Eli Goldratt's Book "The Goal" is on Jeff Bezos (Amazon) Reading List

Supply Chain by Design: Top Five Rules for Cleaning Data for a Strategic Analysis

Supply Chain by Design: Network Design and Accounting Data

Supply Chain by Design: Sears Case Study - Same Day Delivery

Supply Chain by Design: Three Ways UPS and FedEx Handled Christmas 2014

Supply Chain by Design: Deepen Your Optimization Knowledge Over the Holidays with Free E-book

Supply Chain by Design: Calculating Supplier Lead-Time Variability - Not as Easy as It Seems

Supply Chain by Design: The Myth of the Market Rate and Network Design Projects

Supply Chain by Design: Three Ways the Supply Chain Wastes Big Data

Supply Chain by Design: Three Supply Chain Lessons from the book Scaling Up Excellence

Supply Chain by Design: What to Do About the Rise in Costs Because of the Trucker Shortage

Supply Chain by Design: Modeling Your Competitors

Supply Chain By Design: Just Because the Feature Exists, Doesn’t Mean You Should Use It

Supply Chain by Design: Just Because People are Talking about Big Data Doesn’t Mean it is Clean Data

Supply Chain By Design: Can Western Manufacturing Be Saved: What Does it Mean to Your Firm?

Supply Chain By Design: Optimized Baseline and the "Perfect" Network Design

Supply Chain By Design: Become more Analytics-Driven to Recruit Talent

Supply Chain By Design: Step Up Your Preventative Maintenance with Predictive Analytics

Supply Chain By Design: Demystifying Stochastic Optimization

Supply Chain By Design: More on Big Data in the Supply Chain

Supply Chain by Design: Should You Extend Your Network Design Capability with a Map Portal?

Supply Chain by Design: A New Trend in Network Design: Flow Path Modeling

Supply Chain By Design: Top 5 Skills You Need in a Supply Chain Modeler

Supply Chain By Design: Comment on Biggest Supply Chain Planning Technology Challenges

Supply Chain by Design: Beyond the Square Root of N Rule

Supply Chain by Design: UPS's Christmas Problem Explained in One Graph

Supply Chain By Design: Your One Network Design New Year's Resolution

Supply Chain By Design: 80/20 Rule for Supply Chain Design

Supply Chain By Design: What Makes a Good Inventory Buffer

Supply Chain by Design: Some Things Do Not Change: Cost and Service Trade-Offs with Air Shipments

Supply Chain By Design: The Impact of Natural Gas Trucks On Your Supply Chain Design and Capabilities

Supply Chain By Design: Controlling Inbound Transportation with Inventory

Supply Chain by Design: Three Types of Supply Chain Buffers

Supply Chain by Design: Systems Thinking and the "Limits" of Optimization

Supply Chain By Design: 3D Printing and Robotics - Disrupting the Dominant Supply Chain Model

Supply Chain by Design: Future Supply Chain- Airships and the Physical Internet

Supply Chain By Design: Avoiding Capital Investments - A Hidden Benefit of Network Design

Supply Chain by Design: Three More Reasons the Impact of the New Hours of Service Rules May Not Be So Drastic

Supply Chain By Design: Three Ways to Handle the Lag Time from Modeling to Implementation

Supply Chain By Design: Three Quick Steps for Analyzing Big Data

Supply Chain by Design: What is Big Data?

Supply Chain By Design: Using Optimization to Compare Facilities or Internal Benchmarking

Supply Chain By Design: Four Steps for Thinking About An Optimization Problem

Supply Chain By Design: Don't Let the Term "Optimization" Become a Buzzword

Supply Chain By Design: Supply Chain Models Can Go Wrong - A Different Perspective

Supply Chain By The Numbers: Top Three Ways Supply Chain Models Can Go Wrong

Supply Chain By Design: Supply- and Demand-Centered Modeling: A Follow Up to 2013 Priorities

Supply Chain By Design: Three SCDigest Predictions You Should Be Modeling

Supply Chain by Design: Cost to Serve Modeling

Supply Chain By Design: Top Five Models You Should Build in 2013

Supply Chain By Design: Should You Source from China or the US? Why Not Both?

Supply Chain By Design: Same Day Delivery and Network Design

Supply Chain By Design: Political Supply Chain and Network Design

Advanced Analytics in Supply Chain - What is it and is it better than Non-Advanced Analytics?




#3. Reassign customer territories.
In this exercise, you are taking all your demand points, your current warehouses, and assigning the demand points to the closest warehouse. You want to keep this simple, but can add a few twists if you like. In the map below, we also consider the capacity of the warehouses so there is some overlap in the territories. Although there may be reasons that you don’t ship from the closest warehouse, this again may reveal some savings.

 

#4. Model what would happen if you lost a warehouse. Another simple model is to model your current demand points and the warehouses serving those points and then shut down a warehouse and let the model reassign demand points. This is a quick way to build a high-level contingency plan and understand risk in your supply chain.

#5. Model a single product. When people build a model, they often don't want to "waste" time by having to go back and add more to the model later. This can be a mistake. It is often better to start with a simple model so you can learn and then add complexity later. This can save you a lot of time in the long-run. A good way to start is to build a full model for a single product (and pick a good product–like a high volume one). This minimizes the scope, but let's you learn a lot about what it would take to build a larger model.


Final Thoughts

Although none of the above models is complete, you will learn a lot from them. You may find big savings just from these models. You will also gain valuable insight into what you should do next and which models you should extend. Without going through the simple models, you may spend time building a complicated model that doesn't answer the important questions.

Recent Feedback

Upon competion of the modeling, what are the ways to compensate for the lag time in information that may result in increasing the level of risk into the supply chain?

Thanks,

Richard

www.keystoenbusinessgroup.com


Richard Schmidt
Founder
Keystone Business Group
Jan, 16 2013

Great writeup! What tools have you used to build the maps in your article? 


Hank Kafur
Project Manager
Oya Logistics
Feb, 23 2013
 
.