Supply chain network design for success

From the July-August 2024 edition of Supply Chain Management Review.

July-August 2024

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Accurate modeling of a company’s supply chain network provides insights into optimal production, storage locations, and raw materials supply network strategy. The modeling process can last from one day to several months, and the supply network design team might run hundreds of scenarios and simulations over the course of a project. Once that work is completed, conveying the findings to senior stakeholders can become a fundamental challenge. How does one turn analytical insights into strategic directional business recommendations? In our experience, there are three fundamental tactics for effective supply chain network design storytelling.

It is impossible to move forward without the stakeholders being fully on board

Throughout business history, management commitment is the recurring ingredient for project success. Stakeholder feedback is what keeps the wheels spinning. Only by having their buy-in, engagement, and support from the beginning through the end of each modeling cycle can the supply network design team achieve success by developing compelling, actionable, and specific business recommendations.

The process of summarizing recommendations isn’t simply about minimizing costs or maximizing efficiency—it’s about uncovering value. Through data storytelling, you can address essential questions about business performance and company priorities: What’s the story behind your sales trends? How do different factors influence your lead times? Where are your opportunities for improving the bottom line?

The following three tactics will allow network design teams to more effectively engage with data storytelling to convey important messages to stakeholders.

Tactic #1: Present pearls, not oysters

Picture this: you have just opened a hundred oysters in search of a few precious pearls. It was a painstaking process, and now your task is to share these treasures with the team.

When it’s time to communicate your analysis, think of yourself as a storyteller, narrating a grand adventure. Your story isn’t about all the oysters you opened; it’s about the discovery of the pearls.

It’s easy to fall into the trap of showing your audience the entire journey. You might feel the urge to display every piece of data you have, every oyster you cracked open as a testament to the thoroughness of your exploration. After all, you’ve spent hours analyzing and you want to demonstrate the breadth and depth of your work. But opening all those oysters can be overwhelming and time-consuming.

Instead, focus on the pearls (as described by Knaflic, C.N. in the essay “Storytelling with data: a data visualization guide for business professionals,” Wiley 2015) —the critical insights that emerged from your analysis. These are the core results of your story. The goal is to transform your complex data into digestible, relatable information that senior executives can easily comprehend and appreciate.

In the process of preparing a presentation for stakeholders, focus on delivering key insights and actionable outcomes instead of overwhelming them with all the scenarios and models evaluated during the analysis. This means avoid opening the meeting with “we ran fifty different scenarios” or “we compared two hundred forecasting models.” Remember, your audience doesn’t need to open every oyster—they need the pearls.

Tactic #2: Quantify every step

In demonstrating this approach, consider the example of a stakeholder raising the challenge to the network design team to determine the cost-benefit of a 10% production rate increase across all production plants. Assuming that the baseline scenario has already been created, this might initially appear as a straightforward task.

We can very quickly determine that the 10% rate increase across all of our plants results in $5M in savings per year. Is this the message that we want to convey? It is best practice to anticipate possible challenges to scrutinize the response and think about further challenges that could follow.

• Will this answer encourage discussions between stakeholders?
• Does this answer drive additional decision-making?
• Does this answer enhance the stakeholder’s understanding of the network’s dynamic behavior?

The responses to these queries imply that the answer will merely trigger a cascade of further inquiries which the supply network design team should have anticipated and prepared a response.

Returning to the original question of a 10% rate increase, a good answer might look like this: “The 10% rate increase across all of our plants results in $5M savings/year in a flat market, $2M from a rate increase at plant 1, and $1.5M from a rate increase at plant 5. However, even a marginal 5% drop in the industry volume would negate these savings for all plants, except for plant 5.”

Approaching this task is in many ways similar to conducting a scientific experiment. The process of evaluating individual contributors and their combinations is often seen in experimental design. In experimental design, the process of evaluating individual factors (contributors) and their interactions (combinations) is often done through factorial design. This includes methods like two-factor or multi-factor analysis, where scientists test multiple variables at once to see their individual and combined effects.

To deliver the recommendations with the reliability of a scientist, the network design team must develop a scenario for each change to assess its impact. In this case, it would be assessing the impact of increasing the production rate at each plant individually and then in combinations.

It is very common in network design practices not to get a loaded question; but, it is the ultimate practice of the team to present a loaded answer. Let’s consider another example to illustrate this: if the question on the table is to “identify the best location to produce a new product,” it is deceitfully simple to use the demand projections, find the optimal location, and finish there. However, you should always look at the full business context of cause and effect. If this new product has a very slow run rate, the outcome will cause a negative impact/consequence on the whole network. It is critical that the team not only considers the obvious intended consequences/causes, but also identifies and considers unintended consequences/effects. The recommendation in this case should not only be about the best location but should also emphasize reassessing the assumptions about the product in question.

Tactic #3: Explain why other solutions are suboptimal

You are in a room full of senior stakeholders. You have just recommended a particular course of action based on your supply network design model, explaining how it would bring substantial cost savings, increased efficiency, and better customer service. But then, a question arises: “Why not do this another way? Why not adopt this alternative solution instead?”

Herein lies the challenge—and opportunity—for the network design team. Showcasing why other solutions are suboptimal is as important as demonstrating why your solution is the most favorable one. This doesn’t mean simply dismissing these alternatives as inferior. Instead, it involves demonstrating the nuances of these alternatives—the potential challenges, the higher costs, and the inefficiencies—that make them less than optimal compared to the total supply network value created by the recommended solution.

For example, consider a scenario wherein your team was instructed to find the best way to increase manufacturing output across the supply network. Your recommendation is to move the manufacturing of problematic product A from plant 1 to plant 2. An alternative solution suggests stopping the manufacturing of product A, which you, as the supply network design expert, know not to do: it will cause a drop in demand across product categories.

Your objective is to illuminate and make visible these implications to your stakeholders. It’s about painting a clear picture of the potential pitfalls and the chain of events that would follow. The result is that you not only validate your preferred solution but also enlighten your stakeholders about the intricate dynamics of supply network design and behavior.

Explaining why other solutions are suboptimal isn’t about winning an argument. It’s about fostering a deeper understanding among your stakeholders. It’s about sharing the complexities of supply network design in an engaging, relatable way that leaves your audience feeling informed, enlightened, and ready to embark on the journey ahead.

Conclusion

In supply chain network design, the magic lies in the narrative. As a supply network professional, your objective isn’t merely to design efficient networks. It’s to use your data to tell compelling stories that inspire, enlighten, and persuade. You are the narrator of your supply network story. You have the power to make it worth listening to. Your tale of strategy and optimization, of risk and reward, and of innovation and impact is waiting to be told. It’s time to take the stage and share your compelling supply network design story with your stakeholders. It’s time to let your story shape the future of your supply network.

About Global Links

Global Links appears in each issue of Supply Chain Management Review. Richard J. Sherman, retired guru of SCM, is the Global Links column editor. If you are interested in participating in the column, he can be reached at [email protected].

About the authors

Marianna Vydrevich is the manager of operations research & network optimization at GAF, North America’s largest roofing manufacturer. She can be reached at [email protected]. Nari Viswanathan is senior director, product segment marketing—supply chain at Coupa. He can be reached at [email protected].

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