By Pedro Quiterio, February 8, 2022
Keeping Pace Through Volatility
The modern supply chain must be more dynamic than ever to keep pace with an increasingly volatile marketplace. From carrier capacity shortages and rising fuel costs to unforeseeable global events, the next startling disruption is always just around the corner. Innovators know they must continuously look for ways to get ahead of such outcomes whenever possible. One tried-and-true way of accomplishing this is by using advanced transportation modeling software and related evaluation techniques. Let us explore a few reasons for conducting such analysis:
1. Understanding Your Current Network Better
How do you expect to improve your network if you do not fully understand what you are already doing? Transportation modeling typically requires the establishment of foundational baselines to begin subsequent analyses. This activity is not only good practice but can function as an organizational “health check,” facilitating internal conversation about current practices and leading to easier identification of pain points and redundancies.
2. Simulating “What-if” Scenarios for Unexpected Events
It’s impossible to know the future, but it is possible to plan for many potential outcomes and develop contingencies for certain types of events. Even if a specifically modeled scenario does not occur, having a plan for a similar type of event could put you several steps ahead of your competitors. Being the first to adjust to new conditions can provide a significant competitive advantage when executed properly.
3. Exploring New Network Ideas or Improvement Opportunities
Perhaps you have been discussing where to locate that new distribution center? Or maybe recent conversations have entertained the introduction of hub or pooling strategies? As new ideas often require some amount of ROI to obtain capital funding, transportation modeling software can serve as your proof-of-concept and provide the data that moves the needle. Discuss your ideas with senior management, knowing that your scenarios have already been tested and are supplemented by measurable and verifiable metrics.
4. Supplementing Demand Forecasts
Understand the effects of variable inputs on the supply chain. How would your business be impacted by the loss of a key supplier? What are the effects of reduced demand for a particular product line? Simulate these types of events to understand how your network might be affected and avoid bullwhip effects.
5. Evaluating Operational Plans and Carrier Rate Changes
Determine how to enhance network performance and the potential savings to be generated by replacing your poorest performing carriers or most expensive shippers. Explore mode shift opportunities and service commitment modifications to develop the optimal network plan. Understand what a 5% carrier rate increase will really mean to your profitability. Compare scenarios and combine the best parts of each plan to achieve the ideal outcome.
Now ask yourself:
How many of these areas are you successfully modeling today? If there are any gaps, are you truly getting the most out of your transportation modeling software? Leading modeling technology solutions such as the Blue Yonder Transportation Modeler (TMOD) allow you to develop these types of plans and migrate them from theory to TMS execution with ease. Switch between desired configurations on-demand or utilize different plans for specific scenarios. When using TMOD in conjunction with the Blue Yonder TMS, expect consistency in output and gain confidence from knowing that execution will occur using the very same parameters, strategies, and heuristics engine used by the TMS.
We can all agree that change is inevitable, so make sure you are preparing for that change and taking a strategic approach to your planning efforts.