We learned the importance of supply chain optimization, its various models, and their uses from this

article.

Since there is a constant need to re-evaluate the supply chain network in the modern world due to the
high demands for goods and services, competition, and customer expectations. A well-planned supply
chain network can lower operating costs, support expansion into new markets, and significantly increase
margins. No matter how mature the organization is, this still holds true.

The network must first be assessed in order to optimize the supply chain. A top-notch supply chain
network requires three essential components.

Strategy before network: your supply chain strategy must be fully integrated with your business
strategy. This can involve things like reducing capital expenditures, boosting operating margins, reducing
carbon emissions, and improving the client experience.

Focus on total optimization: Currently, alternative network models are driven by a combination of
conventional operating scenarios. The effects on how a company is trying to improve the parameters it
uses to drive shareholder value are then evaluated through sensitivity analysis.Ex: EBIDTA, capital
employed, Cash to cash conversation

Project versus ongoing process: A world-class network incorporates a continuous process that
emphasizes the adaptability of the supply chain and guarantees that goals are achieved consistently and
under various market conditions while enhancing the primary drivers of shareholder value. When
sources adjust to market changes, supply chain networks change.

 Strategic Planning: The primary goal of strategic planning is to develop a comprehensive plan for
managing each link in the supply chain while maximizing profit and guarding against any
predictable change in the system.
 Tactical planning is used to put a company's long-term objectives ranging from one to two years
into action and figure out how to achieve them within a specific time frame.
 Operational Planning: Operational planning creates the daily schedule within the distribution
system by implementing operational policies, plans, and tactics.
 Contingency planning is how an organization prepares its mitigation strategies for a disaster or a
failure.

Even after planning sometimes unpredictable events can adversely affect like energy shortages,
strikes, natural disasters, etc,.Before the optimization is implemented the leadership should
understand and support which direction the project will take in order for it to be successful.

All distribution networks have these key components that needs to be evaluated before
implementing optimization. This can include stocking points, transportation, inventory
management, customer service, and ERP/MIS systems. Where and how these are located and
managed will be determined from network optimization.

There are three categories of network models.

1)A centroid analysis,2) optimization models,3)Simulation models.

Regardless of the modelling technique used, the overall strategy should be very similar to the
following.
Validate existing network. Run alternative, summarize run and rank, summarize annual cost,
perform sensitivity analysis and determine all investment cost.