Strengthening your supply chain one link at a time. 

Identifying the Need for a Strategic Supply Chain Study

Many companies, particularly small to mid-sized businesses, may not have the expertise or resources to conduct a strategic supply chain network study. While some organizations have dedicated supply chain teams well-versed in network optimization, others struggle to recognize when such a study is necessary or how to initiate one.

A well-executed strategic supply chain study can uncover hidden efficiencies, reduce costs, improve service levels, and enhance long-term supply chain flexibility.  Below, I outline what a strategic supply chain study entails, why it is valuable, and the key symptoms that indicate a company could benefit from such an analysis.

So how does a company realize a supply chain study is necessary?

What is a Strategic Supply Chain Study?

First, a strategic supply chain study is an in-depth evaluation of an organization’s end-to-end supply chain network. The study goal is to optimize key components, such as facility locations, inventory distribution, transportation strategies, and contingency planning.

Scope of a Supply Chain Study

When designing a supply chain network, companies typically focus on one of two primary approaches, each requiring a tailored strategy:

1. Production-Centric Networks
   • Starts with raw materials and suppliers.
   • Examines the flow of materials through manufacturing and distribution.
   • Optimizes production site placement, storage capacity, and outbound distribution.
2. Distribution-Centric Networks
   • Begins with supplier/vendor shipments.
   • Analyzes product flow through warehouses and fulfillment centers.
   • Aims to improve distribution efficiency and minimize transportation costs.

The key is that while every supply chain network is different, any network can be evaluated with the appropriate scoping and focus.

Key Aspects of a Supply Chain Study

A strategic study typically consists of a one-year or multi-year time horizon.  This allows for companies to plan for long-term improvements.  It incorporates:

• Data-Driven Insights – Using shipment, sales, and inventory data to map current supply chain flows.
• Comprehensive Cost Analysis – Factoring in transportation, warehousing, and inventory costs.
• Scenario Planning – Running “what-if” scenarios to evaluate potential changes.
• Mathematical Modeling – Employing advanced analytics beyond Excel spreadsheets to optimize decision-making.

The goal is to generate insights that compare the existing supply chain state to optimized alternatives. These insights drive more informed decisions, improve operational efficiency, and mitigate future risks.

Recognizing the Signs of an Inefficient Network

Companies may not always recognize inefficiencies in their supply chains, but certain operational symptoms indicate that a strategic study could provide substantial benefits.  If an organization has one of these symptoms it very well could suggest a Supply Chain Study is in order.  Below is a sampling of some common inefficiencies.

1. Excessive Use of Offsite or Temporary Warehousing and Inventory Mismanagement

• If a company frequently rents offsite warehouses for raw materials or finished goods, it may be a sign that the existing network is not optimized for storage capacity.
• These temporary solutions often lead to higher costs, increased complexity, and inefficiencies in inventory management.
• A strategic study can determine the ideal number, size, and location of warehouses to support long-term demand.

2. High Reliance on Inefficient Transportation Modes

• Companies that overuse less-than-truckload (LTL) shipments may be paying more than necessary for transportation.
• A study can restructure distribution networks to maximize full truckload (FTL) shipments, consolidate freight, and reduce transportation costs.
• By optimizing warehouse placement, companies can reduce the distance and frequency of LTL shipments, making the network more cost-effective.

3. Supply Chain Disruptions and External Challenges

• Global disruptions, such as port closures, transportation cost volatility, weather events, and trade restrictions, expose weaknesses in supply chain networks.
• A study allows businesses to develop scenario-based contingency plans for these disruptions, ensuring stability during crises.
• Companies can identify alternative shipping routes, backup suppliers, and emergency distribution strategies to maintain service levels.

4. Network Bottlenecks and Poor Customer Service Levels

• If a company experiences frequent stockouts, delayed shipments, or excessive lead times, it may indicate poor network design.
• A study can optimize product flows, reduce transit times, and improve service levels by identifying the best inventory distribution strategies.
• Improved responsiveness to customer demand enhances brand reputation and competitiveness.

The Business Case for a Strategic Supply Chain Study

If your company has identified signs of an inefficient supply chain network, you may be wondering how a strategic study can help.  A well-structured supply chain study delivers tangible benefits.

• Cost Savings – Reducing transportation and warehousing expenses through better network design.
• Efficiency Gains – Streamlining operations to eliminate redundancies and improve resource allocation.
• Scalability – Preparing the supply chain to support future growth and demand fluctuations.
• Risk Mitigation – Strengthening the supply chain against external shocks and uncertainties.
• Competitive Advantage – Enhancing service levels and responsiveness to customer needs.

No supply chain is perfect, and no supply chain can be optimized to a perfect optimal state.  However, there are great benefits of looking at your supply chain network from a strategic perspective.  There are always insights and takeaways. And there could very well be a solution that has never been discussed in the organization, or there could be a solution that validates network change discussions within the organization.

Whether your future sales are increasing, or you have grown out of your main warehouse, or your transportation service to customers is an issue, or your international transportation has port risks there are an incredible amount of takeaway knowledge that solution scenarios can provide in a network study.  And the beauty of this exercise is that multiple scenarios can be generated to test theories, costs and service.

Taking the Next Step: Partnering with Experts

Recognizing inefficiencies is just the first step. Implementing strategic improvements requires data-driven analysis, industry expertise, and advanced modeling techniques.

Why Work with a Supply Chain Consulting Firm?

• Expert Guidance – Consultants bring deep industry knowledge and proven methodologies.
• Advanced Analytics – Leveraging sophisticated modeling tools beyond traditional spreadsheets.
• Customized Solutions – Developing strategies tailored to a company’s specific needs and goals.

At St. Onge, we specialize in helping businesses navigate complex supply chain challenges. Our team has the experience and resources to assess current operations, analyze available data, and provide strategic recommendations that drive short-term cost savings and long-term operational improvements.

If your company is experiencing operational inefficiencies, excessive logistics costs, or supply chain disruptions, now is the time to explore a strategic network study. The insights gained can transform your supply chain, improve resilience, and position your business for sustained success.
 
—Tom Schaefges, St. Onge Company
 
 

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