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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

December 30, 2013



Your One Network Design New Year's Resolution

Don’t Put Off Your Network Design Projects Until the End of 2014—You Might Regret It


Dr. Watson Says:

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...Don’t wait until someone else starts looking at your supply and finds savings.
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It is well-known that doing a network design study can lead to large savings.  It can reduce your costs by 5-15% and shave millions from your total spend. 

When you do a project and find nice savings, your celebration of the good savings is quickly dampened by the realization that you should have done the study earlier.  That is, when you find big savings today, it just means that you have been wasting money over the past six month, year, or more by not having done the study sooner.

Don’t let this happen in 2014. 

Stay on top of your supply chain.

Your New Year’s Resolution should be to look at your network early in the year and capture the savings immediately.  Don’t wait until the end of 2014.  Don’t wait until costs in your supply chain get out of control.  Don’t wait until someone else starts looking at your supply and finds savings.  Take a look at your supply chain in January.


If you know you need to do a network design study, start your study early in the year so that you can be well into the implementation by the end of the year.

Previous Columns by Dr. Watson

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

More

Of course, you may not be ready to make major changes, like opening or closing a warehouse.  But, the study could still reveal the proper territories of your warehouses or how you can better use the structure you have.  And, as a good manager, even if you aren’t ready to make a major change, you should understand what the potential savings could be.  You should be ready to let the CEO or Board know that there are things that could be done to take costs out of the supply chain.  Your company may not be ready to make a major change for $1 million.  But that if that major change turns out to be a $10 million savings, people many reconsider.



Final Thoughts


Besides doing a study early in 2014, you should make it part of your practice to regularly review your supply chain.  The longer you wait between studies, the greater the chance that you missing opportunities.

 

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