A theme we keep going back to is that you should visualize your data with a map. (You can see some examples, here, here, here, and here). One important aspect of this is that you should see a different amount of data as you zoom in on the map.
The following example shows the demand by three different types of products at the state level. The second example shows the same data, but reported by census tract. So, when you are analyzing a small geographic area, you are presented with much more detailed information.
Back in 1854, John Snow plotted cholera on a map to help prove that the outbreak could be traced back to a water pump. Fast forward to 2011 in Lahore, Pakistan, and the same idea is being used to prevent the spread of the mosquito borne dengue fever. The health team is allowing a smartphone app to record the presence of infected mosquito larvae, plotting this on a map, and then using this to help determine when to best spray. It is a clever update of John Snow’s idea and shows the power in geographical visualization.
For more information on this application, see the recent article in The Economist, Technology Review (which is where the map is from), or IRIN.
This type of visualization is also important in network design and important to business, in general, as Justin Holman, CEO of TerraSeer, points out.
On SCDigest, I wrote an article about the 5 models you should build in 2013. These are simple models meant to get you started and add value. Here is the list, but see the SCDigest article for more detail.
#1. Plot your demand on a map
#2. Add the current lanes you are using to serve your customers
#3. Reassign customer territories
#4. Model what would happen if you lost a warehouse
#5. Model a single product
Justin Holman, the CEO of TerraSeer, recently wrote an interesting blog post suggesting that a great place to start a Big Data journey is to build a map. He argued that most firms and managers don’t have the resources or technical capability to do a full-blown analysis on all their data. But, a map is a relatively simple place to start that will allow you to visualize a lot of data quickly and in a new way (most firms still don’t use enough maps to view data.)
For the supply chain manager, I would agree. As we’ve discussed before, a map can be a great way to view your customers by different types and relative demand (as seen in the map above). It can also be a great way to see how product is flowing through the supply chain.
We have seen many cases where a company finds savings opportunities by just looking at their data on a map. It is often the first time the managers have seen the data presented in this way. And, it allows the managers to quickly understand their business in ways that were not obvious before.
Even if you are not doing a full-blown network design study, I would still recommend mapping your customers and supply chain. You may learn something new.
In practice, you need flexibility to single source customers and groups of customers. (By customers, I am referring to the final ship-to location. This could be a retail store, your distributor’s warehouse, or even an end consumer)
For example, you many minimize your costs by shipping from multiple warehouses or plants to a customer. But, this may annoy your customers. Or, you may only be able to send full trucks once every two months. To avoid these problems you can single source the customer and find the best single point of delivery to that customer. That is, your products must all travel to single warehouse and then on to the customer.
It also becomes import to single source groups of customers. For example, for simplicity, you may want to serve all the customers in Tennessee from a single warehouse to simplify your operations. Or, you want to serve all your customers that are in the same Sunday Paper region so you can better manage promotions. In the construction business, you want to make sure all the customers in a region receive product from the same manufacturing plant. Boards and shingles coming from different plants can have slightly different colors.
Justin Holman, CEO of TerraSeer, is doing some interesting work for the automotive aftermarket. He put together the map you see in this post to help determine the similar regions for auto parts. He has a post that explains the map and the fact the state boundaries are not helpful for forecasting auto parts.
If you apply his concept to network design, you might want to single the customers in each of the regions that Mr. Holman has identified. This would simplify your decisions about what products to stock in each warehouse and would allow you to better manage demand.
Besides aftermarket auto parts, you could imagine that this analysis would apply to a wide range of products– construction materials, swimming pool products, sun screen, lawn care products, beverages, and about any other product whose demand changes by season.
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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.
We are often asked the question about the geographic scope of network design studies.
We have seen studies done at the global, continental, country, regional, and metro areas. The last two are usually the ones that people question since they usually see examples of a national study.
However, when a firm makes home or local business deliveries within a metro area, they often have exactly the same trade-offs you would see in a national study. These firms don’t want their expensive (and maybe small) delivery trucks to spend a lot of time in traffic or driving across the city. They would rather these trucks spend time at customer sites.
Therefore, they will often need to set up hubs within the metro area. The product moves from a central warehouse to these hubs. Then, the delivery trucks pick up product from these locations and spend time serving customers in their area.
An on-line grocer would be an example of this. The on-line grocer doesn’t want its delivery trucks fighting traffic. Instead, a central location (where they can get economies of scale in processing and inventory) will truck the groceries to hub where multiple delivery trucks will take it from there.
In general, if you need multiple locations, network design can help you.