Artikel
Typical network optimization pitfalls
Too often, we see global organizations repeating familiar pitfalls when evaluating and optimizing supply chain and logistics networks.
As experts in developing and optimizing supply chain networks, we have identified four key pitfalls commonly encountered in network optimization projects.
No concrete target picture committed by management
Many start the analysis without first defining what the network should actually achieve:
- Cost minimization
- Service improvement
- CO₂ reduction
- Risk limitation
- Flexibility
Results can only be inconsistent and lack management commitment for implementation.
Not adequately challenging historical habits
Many supply chain networks are build-upon given structures, such as production network, suppliers- and service providers, organizational structures or beliefs of individuals. These often heavily limit optimization options and willingness to drive necessary change.
The organization imposes limitations not only throughout the optimization project but becomes especially constrained during implementation.
Pure focus on conversion, transportation and warehousing cost
Many organizations tend to focus primarily on obvious cost drivers such as conversion, transportation, warehousing, and logistics services. However, a comprehensive view of e.g. TCO must be adequately incorporated when developing optimization options.
- Make-or-buy
- Inventory considerations
- Factor cost differences
Concentrating only on obvious cost drivers risks drawing wrong conclusions and undermines optimal network design.
Taking shortcuts rather than modelling full digital twin
Many tend to model only some components of the network model and tend to take shortcuts, e.g. by focusing on rough distances, generic cost, etc. A full digital twin allows to simulate different scenarios and adequately considers the impact of each scenario on key financials, but also sustainability and service levels.
Cutting corners during modeling can significantly compromise the quality of the network optimization options.
