The Art & Science Of Serving Demand
DNO stands for Distribution Network Optimization. It is a corporate program that aims to entirely review your demand dynamics and distribution network to enhance the enterprise financial performance, to expand volumes and capacity, and to reduce its environmental footprint. DNO is a co-design engagement that helps the leadership team to draw a common path to a viable and sustainable future. DNO turns Data into a collective vision and shared objectives.
"What will we sell, how much, where, how and when?"
ROLES OF DISTRIBUTION NETWORK
WHAT MAKES DNO UNIQUE?
Distribution is where your supply chain and your customers meet. It's also an area of the business where Sales, Marketing, Supply Chain and Finance need to collaborate to find the finest balance between top and bottom line, between market shares and profitability.
This is also the most complex part of the supply chain - starting from a limited amount of production sites and ending up with numerous delivery points, distributors, retail outlets, or end-consumers spread out all over the market.
Legacy networks are rarely questioned and since the complexity is high, it is often perceived as safer to maintain the status quo and force growth into it.
However, ambitious companies need to reinvent the way they serve an evolving demand to avoid the risk of being misaligned with the market requirement and losing the benefit of their brand and commercial efforts.
DNO is a program that supports tactical and strategic transformation, i.e. looking 1 to 5 years ahead - depending on the market dynamics and strategic intent.
DNO program is a blend of data-driven technologies and distribution expertise. Our DNO team is composed of supply chain experts, data scientists, data analysts, software architects and developers.
Over the years, we have developed some of the most advanced technology applications supporting strategic and tactical supply chain decision-making. One of them is SIMCEL, an advanced demand & supply simulation digital solution that allows to explore and quantify network design alternatives.
DNO is an enterprise program that helps uncover opportunities by resolving demand/supply trade-offs, maximizing sales from demand and profit from sales, and designing what the future supply network should be to support business strategic objectives.
P&L driven: focuses on both revenue & profit maximization
Cross-functional: involves Supply Chain, Sales, Marketing, Finance
Holistic: from plant to customers for all channels, all products
Multiple benefit horizons: short-term practical quick-wins together with tactical & strategic opportunities
THE DNO WAY
DNO puts trade-offs on the table. Thanks to SIMCEL, your network model allows the assessment of the impact of different evolutions. Yet there is no perfect solution. There are always compromises to be made, real life constraints to take into account, and limits in investment capital. Cost-to-serve is not only a question of distance, it also refers to the specific route-to-market and trade terms related to selling a product to a specific customer. DNO brings new insights on profitability by region, channel, and product, enabling discussions on cost, price, trade terms, portfolio, time-to-market, coverage, etc.
DNO allows optimization over different dimensions:
Physical Network: where should the various facilities optimally be located, what are the connections between them
Policies & Rules: how should orders be triggered within the network to ensure the most appropriate cost, service level and inventory balance
Resources: what capacity is needed to absorb growth, what are the operational and technological solutions to maximize ROI
Thanks to a combined physical and financial flow modeling, DNO allows the conversion of all trade-offs into comparable units of measure. EBIT impact is often the best way to assess the true benefit of a given initiative. But getting better profit sometimes involves reducing sales (by removing low profit SKUs from the portfolio for example). That is where trade-off discussions can truly happen.
Example of Distribution Point scenarios:
DNO adapts to your company's strategic intent. If cost is a strong focus, the outcome of DNO looks at optimising Distribution & Storage cost through targeted initiatives. If your growth targets are ambitious, then DNO assesses what capacity is needed under which network configuration to fulfil demand most optimally, by maximizing service level and minimizing order fulfilment lead time. If Cash is a constraint for growth, DNO assesses ways to maintain stock at the lowest level possible to maintain service level to an acceptable level.
The beauty of DNO resides in the fact that all scenarios involve business trade-offs. We bring them to you, you arbitrate, we formalize and come together with a future representation of your network.
Beyond getting to a better network, the DNO program puts a strong focus on supporting change management. That is why we involve people in the trade-off discussions and decision process so everyone understands the underlying reasons behind choices made and the expectations in terms of business impact.