Supply Chain Network Optimization

What is Network Optimization?

Supply chain network optimization refers to the process of designing and managing a distribution network to maximize efficiency while minimizing costs. This involves determining the optimal locations for warehouses, the most efficient routes for transportation, and the best allocation of inventory to meet demand. Optimization models analyze various factors such as demand patterns, shipping costs, lead times, and production constraints to create a streamlined and cost-effective supply chain. At its heart, it’s about ensuring goods move from suppliers to customers in the smartest way possible, balancing operational needs with financial realities.

As LTL freight and labor costs continue to rise, a well-optimized supply chain network isn’t just beneficial—it’s essential. At its core, supply chain optimization is about reducing inefficiencies in logistics while balancing cost, service levels, and operational constraints. Without it, companies will inevitably experience bloated transportation costs, excessive inventory holding expenses, and sluggish delivery times that can erode customer trust and your bottom line. As supply chains grow in complexity, companies that fail to adopt advanced optimization strategies are left with costly, inefficient operations that hinder both growth and profitability. For medium to large distribution firms, particularly those relying on Less Than Truckload (LTL) freight, mastering this process is a competitive necessity.

Traditional Approaches to Supply Chain Network Optimization

Historically, supply chain optimization has been approached through heuristic models, manual planning, and rule-based systems. Traditionally, this might look like plotting the location of customers versus fulfillment warehouses on a map, back-tracing customers’ orders to their closest warehouse, and assigning their cumulative order contents to that fulfillment center, hoping the resulting stocking distribution minimizes overall cost and delivery times. But in today’s technologically rich environment, we can do much, much better.

To arrive at an optimal stocking and supply chain network solution, one must also factor in:

• Supplier transportation cost variation by fulfillment warehouse
• Operating cost differences by location
• The necessities or viability of an intercompany relay network
• The potential cost savings of rented or owned delivery trucks
• Warehouse capacities subject to variations in turnover rates
• Carrier preferred freight lanes
• And the layout trade-offs present when optimizing for freight cost, delivery times, and operating cost

Arriving at the perfect supply chain network layout in the face of these exponentially compounding possibilities is virtually impossible if done manually. These traditional methods—spreadsheets and basic logistics tools—are time-intensive, prone to error, and lack the ability to integrate procurement, fulfillment, and transfers holistically. They also rarely optimize at the granular, order-level detail, leaving significant savings untapped.

So now what? As your business grows larger (and inevitably so does its supply chain), you’ll face a choice between two strategies for supply chain network optimization: in-house analysis or expert consulting.

Your Network Optimization Strategy

We here at DistSpark believe the highest quality results come from working with the most knowledgeable experts. That often means entrusting consultants with both the technical know-how and industry experience to deliver top-quality work. That’s right; we’re biased. However, in the interest of transparency, we’ve provided some considerations for each option:

In-House Analysis

Pros:

• Full control over optimization processes and decision-making
• No dependency on third-party firms
• Potential long-term cost savings if internal expertise is developed
• Ability to iterate and tweak models frequently based on changing business needs

Cons:

• Requires significant investment in personnel, technology, and training
• Steep learning curve for complex optimization modelss
• High initial costs for software, infrastructure, and skilled labor
• Risk of suboptimal decisions if the team lacks deep expertise in network optimization

Expert Consulting

Pros:

• Immediate access to deep industry knowledge and technical expertise
• Faster implementation and execution of optimization strategies
• More precise, data-driven recommendations with minimal internal resource commitment
• Proven methodologies fine-tuned from multiple industry applications

Cons:

• Dependence on external consultants for critical decision-making
• Potential knowledge gaps once the consulting engagement ends

DistSpark’s Innovative Approach

Enter DistSpark, an innovative supply chain optimization company transforming how distribution firms of any size manage their networks. Unlike traditional tools, DistSpark’s AI-driven platform seamlessly integrates product allocation, order fulfillment, inter-warehouse transfers, and item procurement into a single, end-to-end optimization process. Built on Mixed-Integer Linear Programming (MILP), it optimizes both the big picture—network-wide strategies—and the small details—individual order decisions—simultaneously. This dual focus sets DistSpark apart, delivering precision that in-house teams or basic software can’t match.

Key Features and Benefits

1. Granular Optimization

DistSpark dives deep, optimizing at the individual order level. It pinpoints exact cost savings from fulfilling a specific order from one warehouse versus another while balancing network-wide constraints—ideal for LTL freight users seeking significant savings and faster deliveries.

2. User Friendly Experience

Advanced optimization often demands technical expertise, but DistSpark eliminates that barrier. Our team handles model setup and constraint management in-house, making cutting-edge optimization accessible without requiring clients to master complex systems.

4. Customizable Scenarios

What if a warehouse goes offline? How do cost spikes affect your network? DistSpark excels at “what-if” scenario modeling, helping you plan proactively for disruptions and uncertainties.

5. Cost-Effectiveness

Building an in-house analytics team or subscribing to enterprise software can cost hundreds of thousands annually. DistSpark offers comparable insights starting at just $30,000 per year—affordable efficiency for growing firms.

Comparison with Competitors

Compared to tools like AnyLogistix, Coupa Supply Chain, Blue Yonder, and Kinaxis, DistSpark stands out. These competitors focus on high-level planning or require significant user expertise, often at a higher cost ($100,000+ annually). DistSpark offers granular, order-level optimization, a user-friendly experience, and a competitive price, tailored for distribution firms with multiple warehouses.

Real-World Success

DistSpark’s impact is proven. A $500 million metals service center client used our beta platform to identify $7 million in potential LTL cost savings—a 25% reduction—and cut delivery times by 20%. Similar results await firms in metals, textiles, chemicals, industrial goods, and more.

Getting Started with Network Optimization

Ready to revolutionize your supply chain network optimization? Schedule a demo with DistSpark today and see how we can slash costs and boost efficiency. Our team handles the setup, delivering tailored insights through intuitive dashboards—no technical expertise required. Contact us at info@distspark.com to book your demo and unlock a smarter supply chain!