Dynamic network realignment of supply chains
How companies actively manage uncertainty and use scenarios, data and structure to make better decisions
Supply chains are becoming more volatile, markets are changing faster and many decisions have to be made under uncertainty.
At the same time, practice shows that challenges in logistics networks are rarely caused by individual major changes - but often by the sum of many small adjustments that have an impact over time.
We talk to Yenal Ersen, Head of Business Development at OPTANO, about how companies recognize that their network is no longer optimally positioned, why traditional planning approaches reach their limits and how networks can be further developed in a targeted manner.
If you look at supply chains today, uncertainty seems to be the norm rather than the exception. To what extent does this topic currently shape the reality in the companies you speak to?
The perception of uncertainty as the „new normal“ accurately reflects the reality of many companies. Although volatility has always been part of supply chains, it has increased structurally - for example due to fluctuating demand, volatile costs and geopolitical influences. As a result, planning assumptions lose their validity much more quickly today.
Traditional planning cycles, for example on an annual or quarterly basis, are often no longer sufficient to keep pace with the dynamics. At the same time, the quality of forecasts is decreasing significantly. Many companies are therefore moving away from the idea of precise point forecasts and are increasingly focusing on scenarios. This is an approach that futurologist Florence Gaub also emphasizes in her book „Future“ as central to dealing with uncertainty.
In addition, the gap between planning and reality is growing and companies are having to intervene more frequently at short notice to correct deviations. The frequency of decisions is increasing, while their quality is suffering due to uncertainty. The decisive change lies not only in the planning itself, but also in the way decisions are made: away from supposedly reliable forecasts and towards reliable decisions under uncertainty.
„When surgical symptoms increase, the cause often lies in the network design.“
Many networks have grown over the years and have worked well for a long time.
At the same time, we are increasingly hearing that these very structures are reaching their limits.
If you look at it from a strategic perspective: at what point does a functioning network become a problem - and what developments typically lead to this?
Many networks have grown over the years and have rarely been reviewed holistically as part of strategic planning, but rather updated. As a result, they often gradually lose efficiency. It always becomes critical when the original design assumptions no longer apply, for example in terms of quantities, costs or service requirements.
In addition, local optimizations often lead to globally suboptimal results, especially if there is a lack of transparency about end-to-end relationships and conflicting objectives. This not only makes the network difficult to control, but also increasingly expensive to operate and adapt.
This development often goes unnoticed for a long time and initially only manifests itself indirectly, for example in rising costs per unit, falling service levels or growing inventories as a compensation mechanism. At the latest then it becomes clear that the existing network no longer meets current requirements.
Optimization in retail logistics
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If you look at it from a day-to-day business perspective:
How do companies realize that their network is no longer optimally positioned? So not so much on a strategic level, but really in day-to-day operations - are there typical situations or patterns that occur again and again?
In day-to-day operations, a network that is not set up optimally usually manifests itself through recurring friction losses and increasing complexity. Typical examples are frequent ad hoc rearrangements or short-term rescheduling that become necessary to compensate for current bottlenecks or imbalances.
Costs often rise without a clear structural cause, while the utilization of individual locations, routes or capacities falls. Planning processes are also increasingly characterized by exceptions, which impairs their stability and efficiency.
Another sign is the lengthening of decision-making cycles, as the need for coordination between different areas increases. It is not uncommon for recurring discussions about individual locations to arise without sustainable solutions being found. It is characteristic that many of these symptoms occur in parallel, while the actual structural cause in the network remains unclear for a long time.
Further interesting content
The term „dynamic network realignment“ sounds quite abstract at first and is not necessarily something that many companies work with directly on a day-to-day basis.
Let's make this a little more tangible: What exactly is behind it - and what distinguishes this approach from the way network design is traditionally practiced?
The concept of dynamic network realignment is essentially a change in perspective when dealing with network design. While this is traditionally often understood as a one-off project, for example in the context of major transformations, the focus here is on a continuous evaluation and further development of the network structure.
Central to this is a scenario-based analysis that systematically takes into account different developments in demand, costs and framework conditions. Instead of working towards a single target structure, several structurally different network options are compared with each other. Restrictions and conflicting objectives, for example between costs, service and capacity, are also explicitly mapped.
Another difference lies in the close integration of strategic design and operational feasibility. Supported by optimization models, robust and realistically implementable network structures can be identified. The aim here is not to find the one supposedly optimal solution, but rather resilient decision-making options that are viable even in the face of uncertainty.
„From forecasts to options - why decisions today must be scenario-based.“
A large proportion of strategic network decisions today have to be made under uncertainty - for example, because demand, costs or service requirements can only be reliably predicted to a limited extent.
At the same time, we see very different approaches in practice: Some companies try to wait as long as possible for clear information, while others deliberately work with scenarios and assumptions.
How do you experience this in your projects - and what do you think distinguishes those organizations that deal well with this uncertainty from those that find it difficult?
In practice, there is a clear difference: while less mature organizations postpone decisions or rely heavily on experience, leading companies actively make decisions under uncertainty.
Data and models help to make impacts quantifiable and create transparency. At the same time, conflicting objectives, for example between costs and resilience, are made explicit and included in the assessment. Ultimately, what is important is the ability to make well-founded and comprehensible decisions even in the face of uncertainty. The key difference therefore lies not in the quality of the data, but in the ability to make reliable decisions based on it.
When companies start to look at their network not just from one perspective, but systematically run through different scenarios or structural variants and compare them with each other:
What are the typical insights that arise - in other words, what are the moments that really change your view of your own network?
As soon as companies begin to systematically analyze their network across different scenarios and structural variants, very fundamental new insights often emerge. Hidden inefficiencies often become quantifiable and thus visible for the first time.
It also shows how strongly individual network decisions are interlinked. Even minor changes, for example in demand, can trigger unexpectedly large structural effects. At the same time, conflicting goals between costs, service and resilience become much more transparent.
A particularly formative moment arises when data-based results call previous intuitions into question. This shifts discussions away from opinions and towards clearly quantified decision spaces. No-regret measures can also be identified - i.e. decisions that are advantageous in almost all scenarios.
„Structured instead of complex - a pragmatic introduction to dynamic network realignment.“
Many companies are interested in the topic, but are unsure about how to get started - especially without directly initiating a major project.
How do you proceed in such situations and how does OPTANO support companies in approaching the topic in a structured but pragmatic way?
In these situations, we deliberately start with a clearly defined question instead of directly setting up a major transformation project. Typically, we start by analyzing a specific scenario, such as a change in demand, in order to gain targeted initial insights.
We work pragmatically with the existing data without waiting for a perfect setup. Within a few weeks - typically within four weeks - initial simulations and scenario comparisons can be carried out that quickly deliver tangible results.
The approach is deliberately iterative: building on the initial findings, further questions are added and gradually deepened. OPTANO primarily contributes methodical structure and data-based analysis. The aim is to create transparency and provide a sound basis for decision-making without unnecessarily complicating the initial process.
A joint look at a specific issue quickly reveals the potential of your network and where targeted adjustments offer the greatest leverage.
Today, logistics networks have to perform better than ever before: they need to be efficient, stable and adaptable at the same time.
The challenge here is not so much to find the „one right“ structure - but to continuously develop networks and make well-founded decisions under changing conditions.
Data-based, scenario-supported analyses create the necessary transparency to make connections visible and evaluate different options for action.
If you want to actively shape your network in this sense, you can go this way together with OPTANO. Get in touch with us!