Complexity requires more frequent network redesigns

The growing complexity of supply chains and the pace of change in business conditions are prompting companies to undertake more frequent network redesigns. That's a key finding in the Network Design Practices Report, a recent study conducted by the Tompkins Supply Chain Consortium. Sixty members of the consortium took part in the study.

In the two years since the group conducted similar research, the average length of time between network design studies has dropped from 24 months to 18 months. The average planning horizon for implementation is 4.6 years, down from the traditional 5?10 years. Redesigns now are more often spurred by an event such as a merger, rather than on the basis of time, as was generally the case in the past.

The study also found that only 10 percent of respondents considered their existing supply chain network to be "optimized." Another 50 percent said that their supply chain was "close to optimized." The remaining survey takers did not believe their network has been optimized, but not all believed change could be justified.

The report noted that companies are less satisfied with the software applications they use to conduct network studies than they were in the past. The previous study found that 31 percent of respondents were satisfied that their design tools met all of their requirements, but only 8 percent of respondents in this year's study felt that way. The report's authors speculated that the increasing complexity of supply chains and the difficulty of analyzing data and making decisions influenced participants' opinions.

Despite that dissatisfaction, 68 percent of respondents said they use some level of automation to perform network analysis. In addition, most of the software they deploy today provides some form of simulation capability.

Labor disruptions topped the list of risks participants consider when conducting a network analysis. That was followed by weak links in the supply chain, capacity shortages, and disruptions to product flow. The study also found that cost minimization remained the number one reason for companies to do a network analysis, followed by improving customer service and reducing capital outlays.

The entire report can be downloaded here.