The objective of an analysis is to develop Inbound Supply Chain Network with the ability to understand the current baseline network, identify non-intuitively obvious solutions revealed in analysis and review high level scenarios. The analysis should include multiple part families, regions, suppliers and identify supply chain network opportunities with associated costs and benefits.
A typical Inbound Supply Chain Project covers a period of data included in analysis. It is to be defined covering historical, current, and forecasted data. A two year history and a two year forecast is typical. The customer analysis will include key customers (internal and external) and customers by market/distribution channel. Also included are the key supplier locations and costs for inbound flow. The analysis should consider all facilities currently in the supply, logistics, and production networks.
There are a series on logical steps to be followed in the analysis:
- Profile Network
- Assess data needs and availability
- Review Forecast
- Determine expected changes and initiatives
- Prepare the network model
- Complete the network analysis
- Determine product flows from each Supplier to the receiving facility and review the Tier II to Tier I movements
- Develop capacity analysis for production, transportation and inbound warehousing
- Determine the “Mission” of each node in the network, for example raw material warehousing, logistics service centers, plants or alternative storage, etc.
- Conduct stakeholder interviews
Assess data needs and availability
- Evaluate data quality
- Determine additional data needs , obtain source for alternative freight rates
- Identify need for and use of data approximations/assumptions
- Request additional information
- Evaluate demand and operational forecasts
- Identify information gaps in forecast data
- Evaluate forecasting methodology
- Obtain agreement on forecasts from stakeholders
Determine expected changes and initiatives
- Understand production and logistics issues
- Understand network vision and initiatives
- Evaluate impact of changes, vision and initiatives on Inbound Supply Network
- Determine existing constraints based current purchasing agreements with suppliers
Prepare the network model
- Develop baseline policies and assumptions
- Validation of baseline scenario
- Obtain agreement on validation
- Scenario run plans
- Educate purchasing and supply chain team members regarding preliminary findings
Complete the network analysis
- Develop representation of current network
- Present observations from analysis
- Build high level network scenarios
- Identify network opportunities
- Sensitivity analysis of potential costs and benefits of opportunities
The Network Analysis can produce some rather radical changes to the network structure. Moving parts closer to the final assembly facility, make versus buy analysis, the elimination of an operation (machining, etc.) or reducing a Tier II supplier and a postponement strategy (adding a facility, assembly by dealers, etc.) are all examples of major changes that could be very beneficial. Supplier consolidation can occur as a result of commonizing a part. There can be an impact on supply chain costs as a result of part number reduction or the effect of material change on the logistics cost (reducing the size or weight of the part).
At CGN Global, we work with the client to understand the firm’s business history and the relationship they have with their suppliers. With the help of the analytical thinking of our consultants and smart tools, we understand the real problem, provide sustainable solutions, and execute opportunities. CGN’s expertise in supplier collaboration and network modeling provide insights for effective negotiations and successful reductions in lead times, which results in a lean and resilient supply chain.