Optimization still useful here.
A more resilient supply chain from optimized operations planning
September 1, 2022 | Article Form McKinsey
A more resilient supply chain from optimized operations planning
To combat greater complexity and prepare for rapid demand shifts, resilient companies can integrate prescriptive analytics into their supply chain planning.
Article (6 pages)
Across industries, companies that rely on transported materials for their operations have gained hard-earned knowledge from major disruptions over the past couple of decades, most notably the financial crisis of 2008, the COVID-19 pandemic, and geopolitical developments. During times of sudden upheaval, companies must quickly ramp down operations and then ramp up again once demand bounces back, adapt their execution, and revisit long-term plans. The supply chain has a special role to play, as companies rapidly shift their focus from cost-effectiveness to maximized throughput—all with the same assets and infrastructure.
A poor response can have cascading effects, such as facility shutdowns or missed delivery obligations. In recent years, approaches that use data and analytics to identify answers and make recommendations to specific business problems have proved to be particularly relevant in bringing clarity to operations planning and thus improving supply chain resilience. However, the vast majority of companies have yet to implement such approaches in their supply chain, leaving a serious gap in their planning capabilities.
A recent McKinsey article1 examined three value chain approaches that can address this supply chain gap—simulations of reality, optimization of plans, and real-time control-tower monitoring (see sidebar, “How analytics supports different planning approaches”). Here, we examine the second approach in more detail, as it ranks among the most powerful tools businesses can use to navigate complex and changing environments, especially disruptions. .... '
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