How firms can optimise supply chain network capabilities

An embedded supply chain network design could enable them to continuously assess and adjust their network.

To build optimal supply chain networks, companies must create an embedded supply chain network design (SCND) capability that will enable them to continuously assess and adjust their network, according to a Kearney report.

Kearney said participating executives rely on external consultants for larger projects and complex tasks whilst they tapped third-party logistics and fourth-party logistics for tasks in outsourcing projects.

The primary criteria for making strategic decisions regarding SCND include cost (78%). Other considerations were service and inventory levels (52%); environmental impact (48%); reliability and resilience (26%); and quality (17%).

Concerning review frequency, Kearney said companies must not be lax even when the business is going well. “A reactive approach limits the ability to understand and capitalise on the frequent micro changes in today’s volatile environment,”.

Moreover, interviewees said they are now using data and software more effectively to be proactive and forward-looking in their analysis.

Some (35%) have standardised their enterprise resource planning data and pooled it in data lakes for easier and real-time access, whilst others struggle with fragmented data (39%).

As for modelling software, many respondents argue dedicated, off-the-shelf SCND software (48%) is important, whilst others (26%) think in-house solutions built from non-SCND-specific software are better.

Further, companies pinpointed cross-functional collaboration (39%), quality (43%), production (43%), procurement (43%), finance (39%), and planning (9%) as the most important network decision interfaces.

To ensure strategic relevance, Kearney said management must align SCND strategies with corporate goals. Strong supplier collaboration in SCND is also vital (30%), although it is perceived by participants as difficult to accomplish due to the lack of full system integration.

Lastly, some companies use the strengths, weaknesses, opportunities, and threats analysis (13%) and structured business cases (17%) to support SCND decision-making.