Introduction: The challenge of supply chain design (Spanish Version)

Designing a supply chain can be challenging for organizations because long–term vision, customers to be served and their expectations, cost- efficiency, service levels and production capabilities need to be considered. A well-designed network will support the achievement of the business objectives, which are not only associated with the delivery of a product while minimizing total cost, but to responsiveness, reliability and customer satisfaction.

In today’s world, companies operate in diverse markets outside of their own state, country or continent. At the same time, demand patterns and trends dynamically change and as a result generate different types of expectations depending on the industry and client a business is dealing with.

The fact that the customer is a key element of the business strategy,  in balance with many of the other factors mentioned, has brought to the table a higher complexity in the approach of network design. Critical decisions like where to place facilities or when to consolidate or expand, warrant deeper analysis.

To answer these questions confidently, companies are turning to advanced tools that integrate data, analytics, and optimization just like River Logic’s Value Chain Optimizer (VCO), which includes the Center of Gravity (COG) module. This feature is a powerful instrument to support location-based decisions in supply chain design.

VCO’S COG (Center of Gravity) tool and the supply chain network design process

There isn’t one universal approach to network design. At River Logic we use a combination of analytical techniques that require different types of data such as transportation costs, lead times, customer demand, or production volumes, in order to answer specific business questions depending on the design objective.

In this article, we would like to talk about the COG (Center of gravity) capability in River Logic’s Value Chain Optimizer (VCO), as an instrument for answering one of the most fundamental supply chain questions: Where should operations be located to best serve customer demand while minimizing transportation costs? To achieve this objective, COG enables the configuration of greenfield (from-scratch) and brownfield (based on existing infrastructure) initial scenarios that need to be considered, as well as the execution of the rest of the scenarios needed for the analysis.

How is VCO’S COG (Center of Gravity) Tool Used?

Here are keyways companies use VCO’s COG tool as part of their supply chain strategy:

• Visual Heatmaps for Demand Clustering: Users can visualize customer locations and demand density using heatmaps. This helps identify areas where consolidation opportunities exist.

• Site Selection Scenarios: The tool enables easy simulation of where to locate new facilities based on weighted demand, transportation cost, and service levels.

• Facility Rationalization: Companies can evaluate the strategic value of current sites by comparing their actual location to the optimal center of gravity.

• Customer Proximity and Trade-off Analysis: Businesses gain insights into how to balance serving high-demand areas quickly with minimizing logistics costs.
• Sensitivity to Changing Demand: The COG module helps model how projected demand shifts can affect optimal site placement or transport costs over time.

Once the COG analysis is finished, River Logic Value Chain Optimizer (VCO) enables teams to create a digital model of the current network, incorporating other inputs like costs, capacities, transportation modes, inventory flows and budgets constraints. By running simulations, teams can identify inefficiencies, bottlenecks, and untapped savings.

The subsequent steps would involve the use of other analytical approaches supported by capabilities of VCO such as network optimization, with the intention of incorporating more insights to the final analysis, in order to come up with the final guidelines and recommendations for the supply chain strategy.

Conclusion

Supply chain design is not just about cost, it is about agility, strategy, and long-term value. Multiple factors affect the process of designing in a world in which there is a lot of uncertainty.

River Logic’s Value Chain Optimizer (VCO) equips supply chain leaders with flexible, easy to use, data-driven tools that supports the analysis of the network to meet today’s and tomorrow’s challenges, such as the COG module whose purpose is to simplify complex location analyses without decreasing the quality of the conclusions and providing clear insights to get the best recommendations and guidelines.