The Importance of Network Design

The very design of a supply chain network has a huge impact on inventory optimization. For this epsisode, we’re delighted to welcome Pinak Dutta, Head of Network Optimization at Spreetail, to discuss what constitutes good design and how organisations can exploit this to improve their inventory allocation.

Pinak is currently Head of Network Optimization at Spreetail, with a background of 10 years in supply chain that spans a vast range of activities from FC engineering, transportation planning, production & supply planning, operations research, network design and inventory optimization gained from chemical manufacturing and e-commerce industries.

Network design is a domain that’s been heavily driven by technology and has gone through several, intriguing stages. In the 50’s, many mathematical models for operations research emerged very early. These models were highly theoretical: linear algebra problematics that were simple to execute at a mathematical level but weren’t actually used in any industry. Then in the late 90’s, the first breakthrough came - the CD-rom. Suddenly, on an easily accessible, compact disk you could have a highly detailed electronic map for an entire region. At this time, the internet was very slow so downloading something like a map wasn’t possible. With Google Maps, this may seem very simple now, but at the time it was revolutionary.

Nowadays, the first question we need to ask is what’s the main purpose of the network design? For example, is it developing key strategic initiatives due to growth, with capital investments being taken into account, or do inefficiencies need to be addressed that have developed due to mergers, acquisitions or natural growth? For network design, data is considered on a more strategic level, contrary to inventory optimization where data is evaluated on a more granular level. Network optimization requires you to look far into the future.

To conclude, we talk about the all-important emergence of 3PLs and their impact on network design, as well as the relationship between short-term and long-term business decisions. The Covid-19 crisis has shown the hidden impacts of these business decisions. For example Amazon, who has emerged even stronger despite the chaos due to the infrastructure that they invested in and strategies they adopted. In addition, we discuss the interests for future network planning, such as various environmental considerations, and what the supply chains of the future will likely look like.

Timestamps

00:08 Introduction

00:22 Pinak, perhaps you could start by telling us a little more about your background?

01:24 Joannes, what is your initial overview on the importance of network design on the supply chains?

05:26 Which data are we interested in when we are looking at optimizing our networks?

07:56 From an inventory optimization perspective, how do the different approaches to network design work together and complement each other?

12:10 Do you think that the 3PLs changed the approach that companies are taking and the philosophy they have in terms of network design?

14:00 How easy is to work with those tactical (short-term) decisions compared to working with more strategic (long-term) ones?

16:40 What other data could we include that we wouldn’t classically consider to design our network?

18:07 Iif we look at the future, what could be of interest for designing the networks of tomorrow?

20:49 As a final word, how can you see the future supply chains being shaped by this changing attitude towards inventory optimization?