The Economist recently published a nice survey on Technology and Geography.
As more consumers (and more technicians, delivery drivers, and so on) carry smart phones with locations, it opens up many nice opportunities for geographic services, geographic analytics, and even optimization. This opens the door to more local uses of network design technology.
Also, if you’ve done network design, you’ve seen the value of displaying data on a map.
Taking it further, Justin Holman, CEO of TerraSeer, makes a strong case that firms should be viewing more data on maps rather than in spreadsheets. As firms collect more data about locations, geographic visualization will become more important.
Cheap natural gas has to be one of the top stories of the year. It is all over the press. Wall Street Journal had stories on cheap natural gas helping the rust belt, low-cost gas being the real economic stimulus, and new plants being built in the US because gas is a key input. Supply Chain Digest’s, Dan Glimore thinks natural gas trucks will have big impact as well.
And, the list goes on and on.
At Northwestern’s Masters in Engineering Management blog, we had a discussion on what managers should do about this: The simple answer is to make more products in the U.S. The more complex answer, of course, is that network modeling will help you figure out what to do.
We have often heard that the pharmaceutical industry is not always a great fit for network design because the margins are so high. The argument is that the transportation and logistics costs are so small relative to the cost of the product that they don’t matter.
I recently came across a nice case study written by consultants at McKinsey that runs counter to this argument. The article discusses the network design process in the context of the pharma industry. And the savings they quote are consistent to what we’ve seen in other industries:
As a result of this kind of analysis, one pharma company reduced its network of 25 separate country warehouses across Europe to eight facilities serving multiple countries. The resulting increases in warehouse efficiency and consolidation of product flows helped the company to reduce its overall logistics costs by 15 percent. In another example the reduction in warehouses was from 30 to 15 and cost reduction was 20%.
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When we discuss supply chain risks, we often mention natural disasters, the changing price of oil, or something like a strike (at your facilities or at a port).
But, there are political risks to your supply chain. The dramatic ones are the most obvious– like locating in a politically unstable country. But, even in the US, changing laws and regulations can have an impact on your supply chain. And, so you should add this category of risk to your reasons for better understanding network design and doing this type of analysis on an a more frequent basis.
I wrote more about this in my SupplyChainDigest column.