That’s because focusing the multiple functions on a single,
universally agreed strategy is more likely to bring success
than having the organization begin work on multiple, possibly conflicting, initiatives in parallel.
You and your group probably will have many ideas about
what the strategy should be. But in order to effectively evaluate the various options, you should use supply chain
design tools, also known as network modeling software.
This software makes it possible for managers to model, simulate, and fine-tune many different supply chain strategies.
Senior managers can then assess each one in terms of costs,
benefits, and difficulty of execution. Once they have identified the workable strategies, they can prioritize which ones
to implement first.
These network modeling tools are especially good for
designing multiechelon supply chains—that is, supply
chains that comprise suppliers’ warehouses, manufacturing
plants, and central, regional, and local warehouses. Skilled
users of the software can determine how many warehouses—and at which locations—will minimize total supply
chain costs. (Note that you do need skilled users who can
accurately estimate the costs of new transport lanes and
warehouses in different regions.) In addition, the tools calculate the minimum total inventory investment needed for
the new supply chain in light of lead times, required service
levels, and forecast uncertainties. Good tools also identify
the products that should be held only at the primary distribution center (DC) and those that should be stocked at both
primary and secondary DCs.
There are many strategies these tools can assess, including
those for managing seasonality, manufacturing, and sourcing, to name just a few.
Strategies for managing seasonality are relatively simple to
assess. An important consideration is how best to manage
the trade-off between building stock in advance of the peak
sales season versus paying overtime for manufacturing to
meet demand as it develops. Good tools also allow managers
to compare the cost of temporary warehousing versus oper-
ating throughout much of the year with excess space.
Another factor to model is the forecast accuracy for each
product. It can be wiser to build inventory of seasonal prod-
ucts for which demand is more certain—that is, stock the
products that you know will sell—rather than hold invento-
ry of products that may or may not sell.
