Designing the future of supply chain management
If they even think about supply chain management, most people think it is a very basic, transaction-oriented discipline. We have worked for many years to demonstrate otherwise including through this column. Today, we have a very special case to present.
We are currently immersed in a very innovative engagement in Indonesia as part of a team that is developing a tremendously detailed simulation model of an expansive distribution network.
Physical distribution in Asia is surely more challenging than anywhere else in the world. So many people live on so many different and diverse bits of land. Just reflect on the disparities among the different countries comprising Asean. No single way is "best" for getting goods from supplier to customer, especially end consumers.
When we first moved from Canada to this side of the world almost 25 years ago, one of the first challenges we encountered was how to distribute effectively and efficiently in Indonesia. No one has figured it out yet it seems, but we are intent on finally solving this puzzle.
On this project, we have been collecting and evaluating data for several months. We have been speculating about the best approach to set up the model and, more importantly, what factors we need to consider in striking the right balance between customer service and cost.
You cannot do what we are going to do in a real physical space, as it would be too costly and time-consuming to try out various alternatives. How many distribution centres should we have? What is the best location? What are the best transport routes? What computer-based simulation gives us a chance to do is consider almost any possibility in combination with others and evaluate it in full. Now we have the means to explore and tweak in great detail, evaluate options and optimise.
Challenges such as the one we are facing in Indonesia are the kind of thing that Julien Brun has spent a lot of time thinking about. The managing partner of CEL Consulting based in Ho Chi Minh City, Hong Kong and Jakarta, he recently wrote us an inspiring note, and we'd like to share it here:
"It seems we are getting close to start designing the future. Our crystal ball is a model. A model that, together, we have crafted with the best of our skills, passion and energy. A representation of a specific reality. Like Matisse used to paint his sunrise on Le Havre port and create a whole story and feelings from a limited number of colours and traits.
"I believe that we are going into areas of supply chain management where a very limited number of people have been before.
"Who before has made such a precise representation of such a big distribution system in such a complex environment? What are the differences and similarities between Indonesia and, say, Vietnam or the other Asean members? What about African countries or South American countries? Can we learn something that could be useful for other companies, for disaster recovery, for government and industry policy development?
"And what could this model make us discover, understand, realise about emerging markets? How, with what we have in our hands, can we contribute to a better future?
"We are now exploring the new areas between engineering, science and art. I find it very exciting. We should be already proud of what we have achieved so far and even more proud of what we are about to achieve.
"We must also be aware that our work is aimed at changing the work of a significant number of people, not only our current client's people but many more. We will also have an influence on how the Indonesian market is served overall. We have a big responsibility.
"The goal of our simulation model is to answer questions, make people understand and help to define what the future should be."
As you can see, this project goes well beyond transactions and shipments. It also goes beyond the tactical choices of make or buy, road or rail, air or sea. It goes beyond doing strategic thinking for just the client's business. This, as Julien said, enables our client to design the future for its industry, not just in Indonesia but in many others.
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