All companies operating a physical supply chain periodically need to assess the logistical network to make sure it is cost efficient and delivers on current as well as future customer service requirements. A total optimization of warehouse footprint usually requires significant effort and resources to provide strategic guidance for needed changes. Given the potential magnitude of investments and impact on running costs, decision makers often push for a high level of details and accuracy. This tends to lead to high complexity in data gathering and analyses and surprisingly often counteracts the ambition by undermining findings when data integrity or analysis methods are questioned. A typical response to that is to involve one of the logistics network optimization tools available on the market, in order to allow complex analyses and add credibility to the final results. This risk however is that the optimization tool only acts as a “black box” that hides the analyses (or make them too complex for the human brain to interpret) instead of adding the desired level of accuracy.
All in all, the key question for any footprint optimization project is to balance between complexity and accuracy in order to get results that deliver on ambitions defined. Our experience is that there are a couple of guiding principles that can help you avoid these pitfalls.
If you successfully follow these guidelines you’ll have a much higher chance of both arriving at a solid recommendation for future footprint and making sure you bring key stakeholders in the organization along on the change journey.
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