SUPPLY CHAIN NETWORK

OPTIMIZATION
Supply chain network optimization seeks to nd an optimal combination of factories and
distribution centers in the supply chain. The solution should match supply and demand, as
well as nd a network con guration with the lowest costs. Based on the optimization
results, a manager can compare potential network designs and evaluate the maximum
pro tability of each of them.

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 Supply Chain Network before and after optimization in anyLogistix software

In short, a supply chain model can include a set of all possible ows and facilities. To get
the most ef cient one, you can perform a network optimization experiment in anyLogistix —
a tool for supply chain design, optimization, and simulation. The output data will show
values of transportation and production ows, inventory at the end of each time period, and
associated costs. Furthermore, you will have data on several possible network
con gurations options, including those with the lowest costs. From that, you can then
choose the one that best ts your business and implement it in the real world.

Learn how to use supply chain network optimization to nd optimal DC locations.

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BUSINESS CONSTRAINTS IN NETWORK OPTIMIZATION
In real life, companies may have speci c requirements that are essential for their
businesses. These requirements should be taken into account in the supply chain network
optimization as constraints. Constraints could be, for example, a limited amount of facilities,
or step costs ( xed within certain boundaries).

In anyLogistix, constraints help the software decide which solutions would be feasible.
When setting the parameters for the network optimization experiment, you can choose
values for:
Demand constraints
Product ow constraints
Stock capacity constraints
Production constraints

However, it is not always possible to get an optimal result that complies with all of the
requirements. If the strict operation rules you’ve set for the supply chain are controversial,
no solver will be able to nd a solution. In this case, think about changing some of the hard
constraints into soft. This means that you allow disregarding some of the rules you have set.
For those violations, anyLogistix would charge penalties while calculating an optimal
supply chain result. This provides you with a supply chain network optimization solution
and insight as to why some of the constraints could not be satis ed.

As every business is unique, every supply chain has speci c requirements that can’t always
have predetermined values. For this purpose, anyLogistix has custom constraints. You can
describe them with variables, equations, and conditions. Custom constraints are applicable
in many cases. For example, when you need to maintain a certain product ow ratio
between suppliers, or determine a safety stock percentage from the incoming ow that a
distribution center should build, to name a few.

In case you haven’t set an objective for your supply chain network optimization, anyLogistix
provides the best solution based on maximum pro t.
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MASTER PLANNING
Master planning is an extension of the supply chain network optimization technique that
helps synchronize production, storage, and transport with demand. In short, it answers the
questions: How much and where to store? How much and where to produce?

For master planning in anyLogistix, a scenario is split by periods (e.g. weeks, months) that
relate to each other. For example, one period’s output is another period’s input. Additionally,
for each period, there is a certain demand value. During the experiment, the optimizer
calculates, for each period, if a facility should be closed or open.

Read more about master planning >>

NETWORK OPTIMIZATION WITH ANYLOGISTIX

To perform the anyLogistix Network Optimization experiment, you need to set the demand
for the products in your supply chain as well as the locations of the suppliers, customers,
and facilities (warehouses and DC’s). If you don’t have such input data, you can generate it
with the Green eld Analysis experiment (GFA).

For Network Optimization, you might also consider different types of costs (transportation,
facility-associated, etc.), time periods, and most importantly, constraints. After setting the
necessary parameters in anyLogistix, you run the experiment and the software optimizes
your model
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What’s more, the user can further change or add the optimization model parameters and run
the experiment again to get the result that complies with all of the requirements.

Learn how to use anyLogsitix for advanced network optimization.

After you’ve tried several network optimization iterations, for a deeper what-if analysis and
risk estimation, you may want to convert the results into a simulation model scenario.

WHEN TO APPLY SUPPLY CHAIN NETWORK OPTIMIZATION

You can use network optimization for several supply chain design problems:
Facility location problem, both capacitated and incapacitated
Distribution network design with inventory, lead time, and transportation mode
selection
Hub location problem

See how various companies used anyLogistix for supply chain network design and
optimization:

1. Deloitte designs an optimal supply chain network [case study]

2. Multinational FMCG corporation performs supply chain optimization [case study]
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4. Electronics retailer determines the optimal number of warehouses and their locations
[case study]
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