As supply chain disruptions become the norm, overcomplicating supply chains isn’t the antidote.
But with lingering inflation and global economic uncertainty continuing to challenge businesses across all sectors, companies are re-examining their approach to supply chain management.
While some businesses have looked to counter economic downturns by rushing into supply chain transformation, there's a growing recognition that optimization is the smarter first step to make significant change.
Clients are using optimization as a path to transformation, recognizing the importance of setting strong foundations and removing complexity in their network first.
In this way, businesses will be better prepared to make sizable investments that set them up for the long term, making the most of new technologies as they arise.
The difference between optimization and transformation
To start, let me explain the difference between these two terms:
Optimization refers to various improvements in efficiency, coordination, and flow of existing assets through the supply chain.
Transformation, on the other hand, involves the addition of new assets, people/capability, technology, automation, and the pursuit of industry-leading standards.
Just like if you were about to build a house, the work starts in setting strong foundations - you first must clear the earth, level it, and put the foundations in place.
Modern approaches to optimization
It often takes the perspective of a third-party to find those opportunities using specialized technologies like Simulation.
TMX gives a new meaning to the now commonplace acronym, SaaS, introducing simulation-as-a-service.
Rather than building your own digital twin –a costly and time-intensive activity –businesses can plug-and-play simulation capability to model hypothetical scenarios without having to physically change the asset.
The power of optimization today is that you can take modern tools like Metaverse or simulation, and instead of looking at a problem from one or two angles, you can look at it from hundreds in the space of minutes. It also eliminates the need for time spent or significant capital expenditure to build your own virtual supply chain replica. With supply chains being dynamic and ever-changing, by the time you have built the solution, the next problem is on the horizon. And, if the simulation does suggest such expansive transformation, then your business can do so with conviction.
When are you ready for transformation?
What are the first steps to transform your supply chain? Here's how to start transforming your supply chain in clear steps:
1. Set a clear strategy that looks at your end-to-end supply chain and delivers on business aspirations and objectives (i.e. customer, people/capability, technology, and sustainability)
2. Review and assess the current state of play within your supply chain and the capabilities required to deliver to customer and business needs - and understand gaps (i.e. cost inefficiencies, process complexity, capacity constraints to service future growth, lack of supply chain visibility)
3. Set foundations for transformation - ensure the basics are in place in creating a network that is ready for the future and have a clear and prioritized view that informs investment across supply chain elements (i.e. capability build, data and technology, infrastructure and workforce)
