What Is Supply Chain Optimization?
Some sourcing situations involve constraints and complexities. Constraints are limits on your decision, for example: • A requirement that you must select two suppliers (as opposed to one, three, or any other number) • No supplier has the capacity to handle 100% of your business • A requirement that a certain percentage of your award must be placed with diversity suppliers Examples of complexities may be: • A large number of line items being bid • Suppliers offering discounts at different volume levels and/or combinations of line items • Various delivery locations with differences in the suitability of certain bidders to supply some of them • A choice of freight lanes at differing costs When you encounter situations with lots of constraints and complexities, it becomes quite challenging to figure out the best supplier selection. For these types of situations, some purchasing departments utilize supply chain optimization technology to support their decisions.
