The structure of a supply chain network determines 75-80 percent of the total supply chain costs. Therefore, it is the biggest opportunity to reduce those costs. However, once the manufacturing and distribution assets are in place, and major transportation contracts are negotiated, the company is limited in the actions it can take to improve operations and efficiencies in its supply chain.

The time to discover the biggest supply chain improvement opportunities in the existing infrastructure is when it is assessed: manufacturing capability, raw material sourcing, major transportation lanes, distribution facilities and delivery to customers. By having stable and robust processes in place to evaluate and optimise the supply chain infrastructure the company will be able to realise maximal cost savings and position itself to run a truly optimal operation – both now and in the future.

Ironically, most companies don’t routinely optimise their supply chain networks. However, those that do become the service and profitability leaders. Too often daily operations and short-term crises become the priorities, and nobody takes the time to look at the bigger picture. Unfortunately, it is often the case that a company’s existing supply chain infrastructure is a primary cause of daily disruptions and short-term challenges. Those companies that experience the smoothest and most profitable operations are the ones that routinely re-evaluate both their operations and the infrastructure in place to support those operations. Change is constantly occurring in any supply chain.

A company needs to know which changes it can impact, which ones it cannot, and how to respond to maximise profit. How well a company responds to change will determine its profitability. Designing and optimising a moderate to complex supply chain with multiple products requires making thousands of interdependent decisions. The financial and supply chain analysts are the best at spreadsheet analysis. They can evaluate a potential change in a business plan or supply/demand balance and predict the impact of a given course of action. If they are the best of the best, they can explore maybe as many as 100 different scenarios. However, if this involves multiple products across multiple manufacturing sites, distributing through many distribution points, and serving thousands of customers, there are perhaps thousands of interdependent decisions to be made. Who’s looking at all of these options? Having the tools to effectively consider all the options is the difference between the business with the best supply chain infrastructure and the rest.

Modern infrastructure planning requires a collaborative effort amongst sales, manufacturing, logistics, procurement and finance. Appropriate analytical tools are required to provide each of the stakeholders the right view of each critical decision. Good supply chain operations happen because the people in charge of the different aspects of the supply chain are effectively communicating with each other.

They each provide the critical data necessary to make the best overall decisions, they each can see the critical decisions that need to be made, and how it impacts them, and they are each informed of the decisions being made and the steps their organisation needs to take to implement.

Even with collaboration across all of the stakeholders, the supply chain infrastructure design process depends on forecasts of the future that will not all prove to be accurate. Therefore the planning process needs to include many different scenarios to ensure a robust solution that is well positioned to yield a good return across any of the many possible futures. In today’s business environment, action is required to remain profitable in what will be lean times for most for a while to come. At the same time, the company must have the assets and capacity to respond to the eventual upturn in the economy to be the first to benefit.

Those that recognise the uncertainty of the data that drives their business planning, also explore different possible futures and evaluate their course of action against those different possible futures. That way they are able to confidently make decisions that will perform well across a wide range of possible futures. Having the capability to perform this robust kind of scenario analysis is the single most important action that can be taken to prepare for both the short term and the long term.

If a company really wants to prepare to be profitable both in today’s weak economy and in a future where things are improving and growing, then it will need to be prepared to look for more than simplistic answers. Traditional supply chain infrastructure analysis requires so many broad-based assumptions that hybrid solutions are almost never considered. These hybrids are often the best way to ensure a high level of customer service at the lowest long-term cost.

A good supply chain infrastructure planning process begins with good analysis and evaluation of various scenarios to identify an optimal course of action. However, it is not complete until the final step of implementation planning has been taken. Implementation planning must address the cultural and organisational issues that too often prevent a company from achieving the gains that have been identified. If there is resistance in an organisation to change, it may be necessary to stage the implementation to gain credibility with quick hits before tackling the moredifficult- to-implement changes.

The big changes in today’s world aren’t all financial ones. In addition to the massive changes being spurred by economic shifts, there are also significant changes occurring in the market place that are driven by the need to be more environmentally sustainable and ‘green’: the first step to a greener supply chain is an optimised supply chain – one that minimises the inefficiencies. A good supply chain infrastructure planning process lets the company go beyond the elimination of waste to understand the benefits and tradeoffs among the different drivers of sustainability in its supply chain.

So, as preparations are made for the ups and downs of the times ahead, the company may find that applying solid business practices and processes that have been used for decades and have shown their benefit in good times and bad are likely to provide a path of relative stability and success.

If a company hasn’t already done so, it should consider two things:

• Take a long, hard and rigorous look at the supply chain network infrastructure and be prepared to make the changes that are needed. 
• Implement a proven process of change that involves a broad group of stakeholders and relies upon robust, optimisation-based scenario analysis.

Following these steps will allow a company to meet its business objectives during today’s uncertain times and the economic growth of tomorrow.