Supply Chain Network Design

What is Supply Chain Network Design?
The success of any supply chain network will depend on the plants, suppliers,
warehouses and how the product flows from each of the origins to the final customer.
For any successful supply chain, the number of facilities and their locations are a critical
factor. In fact, 80 percent of the operational costs of the supply chain network depend on
where the facilities are located and the product flows between them. To cut the costs,
you need a more systematic engineering approach so that you can plan and design the
network efficiently. That is why Supply Chain Network Design is so important.
Supply Chain Network Design is a systematic approach to determining the best location
and optimal size of the facilities to be included in the supply chain, and to ensure an
optimal flow of products using advanced mathematical modelling.
Role of Network Design In Supply Chain:
The supply chain network structure of any company will determine how efficient its
processes are and whether it is able to provide its customers with a great experience.
Designing the most efficient supply chain network structure requires the network to
satisfy the strategic objectives of the company over an extended period of time.
The role of network design in supply chain involves the following:
 Defining the business objectives

 Defining the project scope
 Determining the analyses to be performed
 Determining the tools to be utilized
 Completion of the project in accordance with the design.
The Supply Chain Network Design determines the path ahead for the business. If the
supply chain network is completed in accordance with the design, the business can
expect to gain in a substantial way.
Global Supply Chain Network Design Models:
The first step in any supply chain network design is to collect the data specific to the
business, construct a basic model based on that and validate the same.
The supply chain network design models include outputs such as the total costs, which
are the same as those in real world operations. First the basic model is validated and
then depending on the results an alternative design is created or the existed one
modified for cutting costs further and increasing profits.
The construction of the supply chain network design models is handled by highly skilled
consultants who collect high quality data, validate the model and propose alternative
solutions.
Factors That Influence Supply Chain Network Design Decisions:
Here’s a look at the critical Supply Chain Network Design Factors.
1. Location and Distance:
Distance between the different locations of the supply chain and the locations
themselves are important factors to be considered. The location of the supply chain
network includes customers, suppliers manufacturing abilities, airports, ports and so on.
2. Current and Future Demand:
The current and future demands of the company are taken into account as well and
should be grouped appropriately.
3. Service Requirements:
The maximum allowable transit time and distance are used to determine the location of
the warehouses to be added to the supply chain.
4. Size and Frequency of Shipment:
Size and frequency of the shipment are essential factors for determining the costs –
higher the frequency, the greater the cost; smaller the shipment, higher the cost.
5. Warehousing and Labour Costs:
Warehousing costs are fixed costs and are factored into the decision making process.
The labour costs are not fixed, and they play a role as well.
6. Trucking Costs:
The cost and type of the trucking are of a considerable importance.
7. Mode of Transportation:
Which mode of transportation is used in the running of the supply chain matters as well.
Designing Global Supply Chain Networks:
Businesses are no longer just local in the days of globalization and supply chains have
to be global in the way they operate as well. In addition to the factors discussed above,
Global Supply Chain Networks include other factors such as the difference in culture,
language and currencies. Transportation, software compatibility and the cost of fuel or oil
are also considered.
Supply Chain Network Analysis:
The purpose of Supply Chain Network Analysis is to design an optimal supply chain and
to improve the ability of the organization to make more tactical and more strategic
decisions. The logistics management courses are covered in the supply chain
management diploma online, where students learn to design and analyze supply chain
networks.
Supply Chain Network Analysis makes use of a Big Picture Thinking approach to the
supply chain network design from the conceptualization to the implementation. The
analysis is focused on determining the distribution nodes based on factors such as
demand concentration, customer locations, and service requirements.

Supply Chain Network Design

Uploaded by

Copyright:

Available Formats

Supply Chain Network Design

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Supply Chain Network Design

Uploaded by

Copyright:

Available Formats

What is Supply Chain Network Design?

Role of Network Design In Supply Chain:

The role of network design in supply chain involves the following:

 Defining the business objectives

Global Supply Chain Network Design Models:

Here’s a look at the critical Supply Chain Network Design Factors.

1. Location and Distance:

2. Current and Future Demand:

4. Size and Frequency of Shipment:

5. Warehousing and Labour Costs:

The cost and type of the trucking are of a considerable importance.

Supply Chain Network Analysis:

You might also like