Advanced simulation technology is transforming how supply chain leaders approach strategic planning. Charlotte Jordan, TMX Transform Executive Director of Supply Chain, explores why businesses are needing to plan for multiple futures, and how this technology is making it possible.
Supply chain leaders are facing an increasingly complex mix of cyber risk, economic uncertainty, and global instability. In response, businesses are expanding their scenario planning by modelling more potential futures than ever before.
Some are planning for as many as 19 different scenarios, looking across physical node locations and routing/flows, growth assumptions, changes to service/customer needs, operating model and risk profile. Preparing for an unknown future means these businesses need to ‘embed greater flexibility in their networks’ – which will help mitigate unidentified risks and ongoing changes in the external environment.
According to Charlotte Jordan, TMX Transform Executive Director of Supply Chain this expansion of scenario planning, and the increase in the number of scenarios leaders are feeling compelled to test for, is driven by both technological capability, and increased business complexity.
“As U.S. tariffs alter global costs and automation economics, data breaches and security threats require more risk mitigation, and customer expectations about speed, choice and transparency rise, market conditions continue to have a significant impact on operations,” Charlotte says.
In response to this, she’s seeing scenario testing extend across the entire supply chain lifecycle, and notes that new developments in simulation technology can inform decisions at every stage, including strategic review, design and technology assessment, property procurement, and implementation.
Simulation is driving rapid scenario testing
Advanced simulation technology, which allows companies to model complex supply chain environments without physically changing assets or committing capital, is enabling this shift toward expansive scenario planning.
“We’re simulating a much greater breadth of strategic options to pressure test scenarios, and model future operating costs with far more detail,” Charlotte notes.
Simulation creates virtual representations of warehouse operations, network configurations, and automation systems. These digital twins respond dynamically to changes in inputs and variables, revealing how different scenarios would play out across the entire supply chain.
A few years ago, the norm was to have analysts running these models over and over, Charlotte says. “Now, once you’ve twinned your network and built the baseline, we can do that in a matter of minutes.”
She points to simulation’s rapid adoption in long-term strategy, and says there is a wide range of situations and scenarios you can now test for – providing companies with greater confidence in the investments being made into their supply chain, particularly when securing capital can be tough and the macro environment continues to change.
“We can factor in a number of variables – whether this be growth scenarios, different sensitivities on strategic assumptions, changes in customer needs or new services, different operating models or a company’s appetite for risk,” Charlotte says. “Tools likes simulation allow you to do all of this.”
Simulation also changes everything when presenting a business case. “Your sponsor has complete confidence because we’ve tested every scenario, and we’ve not just answered why this option is best, but also why we shouldn’t choose the others. And if things change, you can also confirm what the recommended option looks like or how it can be adjusted,” Charlotte says.
Stakeholder questions also become much easier to answer when there’s a tangible case to show through a simulation tool. “You can demonstrate the future network model and show how it’s running – which is a lot more engaging from a stakeholder perspective,” she explains.
“Simulation provides that fact base. Rather than presenting a single projected outcome, leaders can demonstrate how proposed investments would perform across multiple scenarios, showing both the upside potential and the downside protection.”
Multiple scenarios for one future
Scenario planning through simulation is already helping companies build supply chains that can withstand unstable market conditions and optimise current operations. Charlotte explains it’s a useful tool when companies discover they lack foundational capabilities to conduct future planning, or if they’re missing a comprehensive view of their network.
“We can say, here is your full end-to-end supply chain, and the data and the information representing your physical network in a digital way. This is the opportunity to optimise. This is what it looks like in future state,” Charlotte elaborates.
“Simulating an existing site can indicate how to change its layout or operations to extend its life and support a longer-term investment. The technology can help you bridge that gap and indicate where to cut costs and build efficiencies.”
She believes simulation has transformed the supply chain function within organisations. “Supply chain now has a seat at the table. It’s how you enable customer experience, and it’s part of your competitive advantage,” Charlotte notes. She describes the dynamic as ‘the perfect storm’, accelerated by competitive stakes intensifying as more companies invest in advanced planning tools.
“We used to run strategies with a 5-10 year horizon. Now, that’s shortening dramatically. We need a point-in-time view, and we’ll come back in a year to rerun scenarios when things have changed,” she says.
“Everyone calls strategy a living document, but simulation is making that real.”
