CEO Today Magazine September 2019 Edition

27 www.ceotodaymagazine.com SOLV I NG THE GENDER PAY GAP the desired service level. What are the benefits of network optimisation? For businesses, one of the main benefits of supply chain and logistics network design is a reduction in overall supply chain costs. Rationalising regional, national and global distribution and manufacturing networks helps to identify the most cost- efficient supply chain network. Another key benefit is an improvement in customer service. Optimising the balance between shipping/warehouse costs and service level requirements usually results in better delivery times. This greatly increases the ability to respond to customer pressures and competitive threats. The exercise also helps businesses to perform effective contingency planning, by showing the impact of unexpected events in the supply chain. They can gain an understanding of the effects of various possible events on costs, service levels, revenues and profits, allowing them to develop and evaluate alternative plans to mitigate overall risk. Network design is particularly useful following a merger or acquisition, as it enables businesses to consolidate their distribution and manufacturing networks. This can help them to more quickly realise return on investment. What are the environmental benefits? A key aspect of supply chain and logistics network design is transport optimisation. Modelling alternative transport options helps businesses to determine the optimum solution for their current activity, identifying how and where costs can be reduced and service levels improved by reconfiguring the operation. This is done by looking at • Whether their fleet could be better optimised. • Whether their customer order profiles and delivery requirements have changed since the original transport operation was designed. • Whether a recent business acquisition has provided opportunities for consolidation. • Whether a dedicated transport operation is still optimal, or if it would be more economical to use subcontractors. • Whether fleet size, type and geographic spread is still optimal. • Whether distribution centres are in the right place. Optimising fleet utilisation in this way not only helps to ensure that the supply chain can operate as smoothly as possible, but also reduces empty miles and carbon emissions, which has a significant positive effect on a business’s environmental impact. How to achieve successful network optimisation? Every company is different, and consequently there is no one- size-fits-all approach. Instead, a combination of modelling tools should be used to evaluate and quantify a wide range of potential scenarios, taking into account all of the individual factors concerned. Ideally, this should be combined with the input of highly experienced expert consultants who understand and can advise clients on the implications of these assessments, which will include stock policies, numbers and geographical locations of depots, logistics and environmental costs. Businesses must also bear in mind that identifying the optimal network is only a starting point. The key to success is then establishing a clear roadmap to facilitate the necessary changes. To do this, many factors need to be considered, such as contract and lease commitments, people changes, and systems development. It’s clear that for businesses, sustainability responsibilities and profitability goals needn’t be mutually exclusive. Carefully designed supply chain and logistics networks can benefit both the environment and their bottom line.