The transition from a solely global to a more balanced global-local supply chain is not without challenges. However, it is a necessary evolution to navigate the multifaceted global business landscape. But how? Here are 4 step on how to balance global and local in supply chain.
How to balance global and local in supply chain
Prescriptive algorithms, like Linear and Mixed Integer Linear Programming (LP/MILP), are powerful methods commonly used for Network Optimization problems. Network Optimization can be used to mathematically solve complex supply chain problems. These problems can be related to logistics, facility location, resource allocation, inventory positioning, and the flow of goods. The goal is to minimize costs, meet service requirements, and maximize performance metrics, all while considering various conditions and assumptions.
Combined with massive scenario analysis, Network Optimization models allow you to gain insights not only into the uncertainties stemming from our unpredictable world, but also those created by the limitations in available data and its quality.
4 steps toward a balanced global and local supply chain
Here are 4 steps to achieve a more balanced supply chain using Network Optimization models.
1. Carry out scenario analysis of local versus global needs
Network Optimization models can be used to analyze how different levels of glocalization impact your supply chain. It helps you understand the effects of global versus local strategies across different regions, segments, and phases of the product life cycle. By testing different demand scenarios, the models provide insights into configurating a global-local supply chain to meet demand changes in different markets.
2. Optimize cost, service, and risk adjustments
Network Optimization models can analyze cost trade-offs between global and local strategies, such as transportation, customs, or local compliance costs. It can also assess the impact of glocalization on service levels, such as response times to market changes and customer lead time. They can also evaluate the impact of supply disruptions and assist in designing a supply chain that mitigates risks associated with geopolitical issues or other global disruptions.
3. Improve sustainability and regulatory compliance
Network Optimization models can help you analyze the carbon footprint of different supply chain configurations and design a supply chain that aligns with your company’s sustainability goals. When it comes to legal adherence, it can capture the costs and implications of regulatory compliance across different regions under various glocalization scenarios.
4. Optimize capacity planning and multiple objectives
Network Optimization models can help you optimize production and distribution capacities to meet demand in the most cost-effective manner, in alignment with the global-local configuration. It can also facilitate multi-objective optimization to achieve a balanced approach between global efficiency and local responsiveness, along with other objectives.
Do you need advice from a supply chain expert?
At Optilon, we see the Network Optimization model as a cornerstone of long-term strategic planning and an ideal tool for analyzing the impact of glocalization. We support a modern implementation that relies on thorough scenario analysis, aims for automating the analytic process, and becomes part of your ever-evolving decision-making process.
Contrary to common beliefs, we argue that the “algorithmic approach” is not about finding one perfect answer. Instead, it is about increasing organizational awareness of various possibilities. This heightened awareness will empower you to consistently make well-informed decisions, especially in the face of uncertainty.
Do you need advice on balancing global versus local in your supply chain? Book a meeting with one of our supply chain experts today.
