Supply Chain Logistics Network Optimization: Risk Mitigation and Cost Reduction Within the Aerospace Industry

Purpose: This paper serves to illustrate the risks that affect multinational organizations during this new era of global production and increased supply chain complexity. This paper also strives to showcase the benefits of conducting a Network Optimization analysis on a firm’s logistics system including but not limited to reducing the impact of supply chain market and operational risk, improving efficiency, and increasing cost savings across the organization. Approach: This paper will have two main sections beginning with an in depth look into the theory supporting supply chain logistics network optimizations. Through this literature review, the best practices in the industry will be compared to risk mitigation methodology to determine an analytical process that can be applied to companies considering conducting a network optimization. The second stage of this paper takes a clinical look at the aerospace industry and the implementation process of a Logistics Network Optimization at an industry leader to ultimately recommend additional considerations they should implement into their process. Recommendation: To ensure the effective adoption of a network optimization in the aerospace industry, and other manufacturing industries, the maintenance of logistics data and creation of long term 3PL partnerships are needed for success. It is also important to frame a network optimization not as an operational project, but rather a critical business process aimed to mitigate risk within the supply chain though a four-stage risk identification process.