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Network Optimization: How to Select the Right Supply Chain Network Optimization Software


Network Optimization: How to Select the Right Supply Chain Network Optimization Software

While many companies previously relied on spreadsheets, designing an optimal distribution network requires the use of an advanced software solution to ensure long-term success. With so many vendors and solutions on the market today, selecting the right supply chain network optimization software for your business can feel like a daunting task.

Prior to evaluating different solutions, it is important to first understand your specific needs. Will the software be used for strategic planning—such as long-term decision-making and forecasting—for periodic network analysis, or are you looking for a tactical solution for short-term planning and execution that can also be integrated into an ERP or other management system platform? Answering this question will help you determine which features and functions are critical and which are less important in a supply chain network optimization solution.

While advanced software is necessary due to the complex nature of supply chains today, developing a successful network design also requires industry expertise to achieve maximum value. Additionally, depending on usage and needs, the high cost of network optimization software may not make financial sense for many companies. An experienced supply chain consultant can help you determine the right supply chain network solution based on your business objectives.

Once you have defined the main purpose and requirements of the solution, follow the checklist below to help identify the best supply chain network optimization software for your unique needs.

  • Data Elements: What pieces of information are required to build and run the model? Is all of the required information (manufacturing, storage, intermediary, customer locations, volumes, costs, capacities, timeframe, etc.) readily available and accurate?
  • Data Import: How easily can the information be imported into the model? What formatting is required for import?
  • Data Validation: Can the model validate the information being used to create the model or does that validation need to be completed prior to model build?
  • Baseline Creation: Based on the information required, can a complete and accurate ‘digital twin’ of the current network be created?
  • Baseline Validation: How can the baseline model be validated (cost and volume metrics, locations and lanes) using outputs from the model?
  • Geocoding Level: To what level of accuracy can locations be sited (city/state combination, 3- or 5-digit postal code and/or address level)?
  • Scenario Creation: How easily can scenarios be created off of the baseline? Can the scenarios utilize the same data as the baseline, or do separate databases need to be created?
  • Scenario Validation: How easily and accurately can the scenarios be compared and validated against the baseline from the model outputs?
  • Optimization Criteria & Effectiveness: Can the scenario comparisons take place via the software’s reporting or does this comparison need to be done outside of the model from the model outputs? Can the information be easily compared (cost and volume metrics, locations and lanes) from the model outputs?
  • Solution Mapping: Does the software have mapping capabilities for both baseline and scenario results? Can the mapping be manually manipulated and customized easily?
  • Solution Reporting: Do the reports need to be created or are pre-formatted reports available, easily accessible and understandable? Is there enough reporting functionality to provide the information needed, whether the reports need to be created or are pre-formatted?
  • Center of Gravity (CoG) Modeling (Siting, Number of Nodes, Flow Assignment, etc.): Can the software determine optimal nodes (manufacturing, storage, intermediary) based on volumes and costs alone, or do ‘candidate’ nodes need to be incorporated into the model first and then the model determines optimal flows and which nodes to flow to and from?
  • Transportation Flows Modeling (Cost Sourcing, Mode Optimization, Transit Matrix, Service Levels, Taxes/Tariffs, etc.): Can the software determine optimal sourcing (origin) based on specific business requirements (such as source from only one supplier/warehouse)? Can the software determine optimal mode selection (parcel, LTL, TL, rail, air, ocean) for each flow based on mode criteria and required service levels (no shipment load greater than 44,000lbs., next-day air, 2nd-day ground, within five days, etc.)?
  • Facility Modeling (Capacity Planning, Throughputs, etc.): Can the software optimally flow volumes and manufacture and/or store product based on facility capacity constraints (produce 500K units max annually, 250K square foot storage max, etc.)?
  • Inventory Modeling (SKU Optimization – Quantities & Locations): What level of product granularity (product family vs. SKU level) can the model manage and run efficiently and accurately? Can the software provide optimal cycle, safety and in-transit stock levels and locations?
  • Manufacturing Modeling (Capacity Planning, Work Center Routing, ‘Buy vs. Sell’): In addition to product granularity (product family vs. SKU level), what level of production granularity (facility level vs. work centers within a facility) can the model manage and run efficiently and accurately?
  • Model Accuracy: How accurate (sensible) are the model results? How accurately and efficiently can the model results be compared (via client validation, reporting, etc.)?
  • Ease of Use: How quickly and easily can the software be learned? How easily can the UI be navigated? How understandable is the UI terminology? How easily can model updates be made?
  • Interface Visuals: How visually appealing is the software’s UI? Can the UI, reporting and mapping be used to present to clients or executive leadership?
  • Documentation: Is there sufficient software documentation for training and support? Is the software documentation comprehensive and easily understandable and accessible?
  • Training: Is training offered by the software company? How complete and extensive is the training? Is training documentation provided? Are there any additional training fees?
  • Tech Support: How often is tech support required? Is tech support easily accessible and responsive? Does it require any additional fees?
  • Platform: What platform supports the software (cloud, API, etc.)?
  • Licensing: What is the cost and duration to license the software? Is the licensing fee based on usage (e.g., by project per month) or annually (e.g., a flat 12-month fee regardless of usage)?
  • Additional Costs: Are there any additional fees beyond licensing (training, software usage, geocoding, support, etc.)?
  • Vendor: How long has the software company been in business? How experienced are their personnel?
  • Concerns: Are there any other concerns about contracting and implementing the software?

Ready to improve your supply chain network? At Tompkins Solutions, our consultants utilize cutting-edge technology and their decades of experience to design the optimal supply chain network for your unique needs and objectives. Contact us today to learn how to optimize your distribution network to increase resilience, performance and profit margins.