One of the unexpected opportunities that have emerged from the pandemic is the chance to review and reset your logistics strategy. The emphasis within any supply chain right now is on the key role that the logistics function plays in the efficient distribution of goods to customers.
Traditional operating models are being challenged and have lately struggled to respond to changing market conditions. The increase in e-commerce, changes to buying behaviour, longer waiting times at destinations and borders and increased demand for transport assets have all raised problems that did not exist before. Also, new players are entering the logistics market, security and safety requirements are changing rapidly and labour and employee issues are all factors.
Logistic planning and design
Providing the best service at the minimum cost, developing strategies to manage inventory, distribution facilities and transport capacity are the main principles that run any logistics planning and design. Under the current market conditions, technology can help minimise problems and increase the delivery speed to customers. Therefore, companies will need to adopt digital tools to assist with the large volume of data and the detailed analysis that will provide real-time visibility into their processes.
Network optimisation tools
Software solutions are available that can create models of possible changes that can be made to existing operations. Modelling different scenarios lets you compare and evaluate potential improvement plans, at no risk, using your own live data. Most solutions available provide a drill-down and query facility with results presented on a user-friendly dashboard. Possible changes, both in capital and operating expenses, can be costed and decisions made on affordability and suitability. These tools can also be used to develop a business case for new facilities and locations or advise how to launch a new product or enter new markets.
5 suggested steps in reviewing a current logistics network
1. Define the goal
The first step is to define your ideal outcome. Whatever the aim, it could be cost saving or customer satisfaction, this is where the vision is cemented, and the business objectives are agreed.
2. Gather the data and cleanse it
Assemble and analyse all your current costs. Review the capacity of current facilities and DCs over an agreed period of not less than 12 – 18 months. Include all inbound and outbound freight and delivery costs in the study.
3. Document the current situation
Record where facilities are located: suppliers, manufacturing and distribution facilities and customers. Now include volumes, demand patterns and products and work through the information, bearing in mind constraints and any planned changes.
4. Logistics network scenario modelling to test alternatives
This is where we consider the” what if…?” scenarios which mean setting priorities. Test different logistics network planning scenarios using real data. Make assumptions using industry benchmarks where new activities are planned. Perform a risk analysis on preferred alternatives.
5. Evaluate alternative logistics network designs and costs
The end-product of the modelling exercise is a set of recommendations for improving the logistics network from which you choose the best solution. Often the preferred solution is best implemented as a pilot to test it fully. This trial run will provide the answer to the “go/no-go” decision.
Therefore, in order to boost the company’s capabilities, one of the key moves is to carry out a fully detailed evaluation; leading to new routes and solutions based on the new customer channel segmentation caused by the pandemic.
Moreover, it is crucial to analyse and determine the strong and the weak points that followed after the pandemic. From that point onwards it can be decided what are the digital tools that can be switched from a temporary to a permanent solution, as well as readapting the existing personnel as required.
Lastly, the contracts with the core suppliers, vendors and 3PL logistics service providers can be revised and adjusted based on the ‘new normal’.
How often should a company revise its logistics network design? The Specialist Logistics Network Strategy Consultants at The Supply Chain Consulting Group will always provide tailored recommendations for your business that will optimise your Logistics Network Strategy and operations without compromising the needs of your business or customers.