As the global economy slowly recovers from the impact of the pandemic, inflation is beginning to drop closer to central banks’ targets in many advanced economies. Regardless of economic health, more organizations remain under significant financial pressure in 2024. Companies of all sizes are feeling the financial strain with less access to capital, and large businesses are not exempt, with corporate insolvencies continuing to rise.
For businesses facing the financial squeeze, mapping out a return to stability can be a daunting task. In this mission, organizations across the world confront critical questions about their supply chains: How can they optimize their existing networks? How can they restructure networks to accommodate for dwindling volumes? What difficult decisions, including potential redundancies, must be confronted to weather this storm?
As economic uncertainty swells, leveraging technologies such as Simulation will be critical to avoid knee-jerk reactions. Strategic network design, de-risking, and data-driven decision-making are lifelines to stay afloat whilst still preparing for the future.
Return to square one
A clearly defined problem is a problem half-solved – by classifying the areas hemorrhaging money, businesses can begin to break down complicated problems and generate original solutions. Returning to square one is an important first step for struggling businesses looking to regain control. With an abundance of data in modern operations, it’s important to firstly identify the areas of impact that make a difference, which is why beginning with the problem, not the solution, is crucial to lay the foundation for network design analysis.
Network design can make or break an organization. Future success hinges on increasing resilience and mitigating sensitivity to fluctuations - the ability to adapt to future market shifts needs to be built into facility purchasing and network decisions. However, managing the present and aligning networks to current realities is equally as important. This combination is not without its complications, and requires a few key steps to achieve:
- Step 1: Go back to basics by identifying where your retained customers are located, and which growth markets remain viable. This allows you to focus on the core foundation of your business and center operations around that.
- Step 2: Assess which locations will best support serving those customer markets now and align with your future vision for where the business needs to go. Evaluate both your existing baseline network and set goals for your desired future.
- Step 3: Scenario test different potential situations and mitigate risks. Have contingency plans in place to pivot your network when demand dips, while maintaining the flexibility to capitalize as it rebounds.
- Step 4: Lay out tangible steps towards achieving your desired future network design. Build in flexibility and resilience so your supply chain network can withstand radical changes and disruptions in the operating environment over time.
Simulation to scenario test for the future
In a rapidly changing business environment, it’s important to be quick on your toes. Instead of reacting to current issues with a knee-jerk network overhaul, it's important to step back and consider what your network needs to be able to do five, ten, or even 20 years into the future.
Simulation is a powerful tool to achieve this difficult balancing act. Using Simulation, businesses can model hypothetical scenarios without having to physically change the asset or network. The applications for Simulation are wide reaching, from optimizing routes in the last mile, to reducing the order cycle time or building in flexibility for emerging or collapsing markets.
Simulation at TMX has been used globally, to help clients make informed decisions on their supply chains. Through our work with a global retail chain, Simulation determined that instead of focusing on high CAPEX and limited benefit technology, they could derive benefit through operational change. Their container unload process was optimized to avoid bottlenecks, requiring low investment but delivering a high potential saving of AUD $4.3M per annum.
Instead of rushing into quick fixes, the most successful organizations will leverage data and scenario testing to set them up for the present and the future.
To learn more about TMX’s simulation capabilities, visit here.