Why your expansion plan needs supply chain modeling

A supply chain analysis can lead to better decision-making and more efficient capital expenditures. Here are some specific questions to answer related to your supply chain.

By Jason Duff, Stellar and Donald A. Hicks, LLamasoft November 28, 2014

As the food processing industry continues to flourish, many manufacturers are faced with the need to increase capacity. Whether it’s adding a new process line, building an additional plant or expanding an existing facility, conducting a supply chain analysis in partnership with your design team can lead to better decision-making and more efficient capital expenditures.

Supply chain is one of the first factors to consider in your expansion plan. If you’re planning to move production of a specific product to another location, there is a supply chain network cost associated with that. How will you manage increased inventory requirements and costs? Have you considered increased transportation costs? If you want to build a new greenfield project to accommodate increased production needs, you’ll first need to look at your supply chain and the factors that will impact the location. With multiple plants and multiple distribution centers impacting thousands of customers, your expansion plan gets complex pretty quick.

Strengthening your supply chain
Step one of any plant expansion plan is determining what will produce a stronger supply chain network for your plant in the long haul. While cost is an issue, it’s also about your supply chain network’s responsiveness, service levels and the overall effect on your processing operations. Here are some specific questions to answer related to your supply chain:

  • Where are my suppliers?
  • How am I buying from my suppliers?
  • What sized lots do I have?
  • What are my minimum order quantities?
  • Once I’ve made my materials, where do I stock them to provide a certain level of material to my customers?
  • Which products do I stock? Where do I stock them?
  • Do I stock everything? Can I do that?
  • Which product do I push out most to customers?
  • Which products do I hold at central or district warehouses? Regional warehouses? How much do I hold?

Spreadsheets can model some of these effects and costs, but the data stops at what happens within the four walls of the plant. And while answers to these questions may solve some supply chain issues, you’ll want to bring in your food plant design experts to address broader issues of space requirements and budget implications. Models are only as good as the data that goes into them, and when used together, these two pieces of input can help you make the best choice for the long-term success of your company.

Jason Duff has more than 23 years of experience in the design, analysis and improvement of operations, systems and facilities.This article originally appeared on Stellar Food for Thoughts. Stellar is a CFE content partner. Edited by Joy Chang, digital project manager, CFE Media, jchang@cfemedia.com

Original content can be found at stellarfoodforthought.net.