Risk a Key Factor in Supply Chain Network Design

Significant cost savings and higher customer satisfaction can be found within the design of supply chain networks, according to a recent Network Design Practices Report by Tompkins Supply Chain Consortium. However, achieving these savings requires consideration of risk factors such as labor disruptions, weak links in the supply chain, capacity shortages and disruptions of flow. The frequency of these risks is causing supply chain managers to embark on more frequent supply chain network design studies, according to Bruce Tompkins, executive director of the Consortium.

“With the growing complexity of supply chain networks, companies are beginning to realize the importance of frequent studies,” he says. “Over the past two years, the length of time between network studies has dropped from two years to 18 months.”

The report also suggests that network design practices have to become more sophisticated to match the complexity of the networks they are modeling. And as the studies are occurring more frequently, companies often seek outside help for tools and expertise to increase their performance.
The report concluded that overall, users are not as satisfied with their solutions today as they were two years ago. Two years ago 31% of respondents were satisfied that their design tools met all their requirements, versus 8% today.

“This likely has something to do with new sophisticated tools being used to analyze complex supply chain networks,” Tompkins says.

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