Monday, February 10, 2014

Supply network planning (beyond SCM)

Supply chains are analyzed as a concatenation of different players that allow industry experts to obtain, transport, and transform raw materials into finished goods to commercialize and deliver to the consumer. And while the effects that each of these links have on each other have been thoroughly studied and analyzed, it is not uncommon to forget that any given supply chain -as high-level and all-inclusive as this concept may be- is merely a piece of a much larger puzzle that is known as supply networks.

In a much wider range of processes, a supply network constitutes a web of supply chains that interact with each other while delivering their respective products. The concept of supply networks is especially important when we consider the ripple effect that the disruption of a given supply chain can have on adjacent chains.

Well-known cases, like the 10-day labor lockout of 29 US West Coast ports and how it affected Dell's just-in-time supply chain, are a clear evidence of how interconnected supply chains interact in the face of threats. Sure, Dell played the early bird and managed to ensure its operational continuity. However, and even more importantly, we should take a long deep look at the reactions of other major supply chains that engaged in a fierce competition to procure freight planes or other means of transportation during this event. Ultimately, we may conclude that these supply chains are interconnected by common infrastructures and systematic constraints that cause them to be equally impacted by global incidents.

Many consulting firms and technological solutions have picked up on this necessity and are devoted to helping companies in their network planning processes through the use of with high-level, high-impact, full-blown global simulation models -SAP's APO being one of the most popular worldwide.

Other interesting approaches to the elusive standardized network planning process have been proposed, such as Systematic Network Planning (SNP); which takes variables, sensitivities and scenarios -the three fundamental elements in SNP- into account and iterates through the six steps described below:
  1. Orienting the project
  2. Defining the variables
  3. Analyzing sensitivities
  4. Creating scenarios
  5. Evaluating alternatives
  6. Detailing and doing
If you want to delve deeper into these concepts, you can find a pretty thorough explanation here.

Had you ever heard of supply networks before? Can you think of any other interesting examples of supply networks that bring everyday products and services to you on a daily basis? What do you think the weaknesses and strengths of these systems are? Have you heard about other pervasive supply chain network planning or design solutions out there worth noting? Please share your thoughts on the topic.


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