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Supply Chain Network Design

Supply chain network design involves optimizing the structure and configuration of a company's supply chain to meet strategic and operational goals, focusing on facility locations, transportation routes, and inventory management. Key factors influencing design decisions include strategic, technological, macroeconomic, political, infrastructure, competitive factors, customer response times, and logistics costs. The ultimate goal is to create a cost-effective and efficient network that satisfies demand while minimizing costs.

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11 views

Supply Chain Network Design

Supply chain network design involves optimizing the structure and configuration of a company's supply chain to meet strategic and operational goals, focusing on facility locations, transportation routes, and inventory management. Key factors influencing design decisions include strategic, technological, macroeconomic, political, infrastructure, competitive factors, customer response times, and logistics costs. The ultimate goal is to create a cost-effective and efficient network that satisfies demand while minimizing costs.

Uploaded by

mattmurdock8686
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Supply Chain Network Design?

Supply chain network design is the process of optimizing the structure and configuration of a company’s
supply chain to align with its strategic and operational goals. It focuses on key decisions like the number
and location of facilities (warehouses, distribution centers, plants), transportation routes, inventory
levels, and sourcing strategies.

The goal of supply chain network design is to create a cost-effective, efficient network that meets
demand while minimizing costs and improving customer satisfaction. It involves analyzing data, using
modeling and simulation techniques, and considering factors like transportation, production, inventory
costs, lead times, and demand variability.

What is Network Design in the Supply Chain?

Supply Chain network design is the plan for designing each component of the supply
chain to optimise the resources and reduce the time & cost involved. Planning the number
of facilities and locations is the key role of network design in the supply chain. Here are
the main elements to consider:

 Location and number of:


 Manufacturing plants
 Warehouses
 Distribution Centres
 Inventory Management
 Logistics Planning

Supply Chain network design and optimisation requires the following:

 Integration with the latest technology


 Streamlining processes and operations
 Faster decision-making
 Enhanced visibility across the supply chain
 Seamless data sharing between each of the entities

Factors affecting the network design decisions


Here's a variety of factors that influence decisions in the supply chain network design.
1. Strategic Factors

A company's competitive strategy has a significant impact on decisions in the supply chain network
design. Companies that focus on cost leadership will try to find or create the lowest cost for facilities
manufakturingnya. Companies that focus on response rate tends to place a facility that closed in the
market and may choose a location to high cost if they meet the company's choice to react quickly to
changing market needs. Global supply chain network to support corporate strategic objectives with the
role of different facilities in different places.

2. Technological factors

Characteristics contained in production technology have a significant impact on network design


decisions. If the production technology displays economies of scale are significant, few high-capacity
sites will be more effective. Unlike the case with fixed-cost facilities is lower, many local facilities are
prepared because this will help lower transportation costs. Flexibility in production technology have an
impact pad level of consolidation that can be achieved by the network.

3. Macroeconomic factors

These factors include taxes, customs duties, exchange rates, and other economic factors that do not
exist within the company. This factor has a significant impact on the success or failure of the supply
chain network.

4. Political Factors

Political stability in a country is of paramount consideration because it has a significant impact on role in
the choice of location. Companies prefer to place the facility at a location or state which has a stability
that provide clarity in terms of trade rules and ownership.

5. Infrastructure factors

The existence of good infrastructure is an important prerequisite in allocating facilities in certain areas.
Poor infrastructure will further add to business costs.

6. Competitive Factors
Companies must consider the strategy, size, and location of competitors when designing their supply
chain network. Making important decisions the company is now set for the company's facilities are not
accessible by competitors or in other words away from competitors.

7. Customer response time and local presence

Companies that have targeted customers who can respond in a quick time to put the facilities that are
closed to the customer. If the company sends its products to customers, it means that transportation
should be slightly built and continue to increase response time is short. This choice resulted in an
increase or increase in transportation costs. Furthermore, many situations that require these facilities to
customers.

8. The cost of logistics and facilities

Logistics and facilities costs that occur in the supply chain can undergo changes such as the number of
facilities, location and capacity allocation. Companies should consider, supplies, transportation and
facility costs as the company's supply chain network design. The increasing cost of supplies and facilities,
the greater the number of facilities used in the supply chain. The lower the transportation cost, the
greater the number of facilities. If the number of facilities increased at a point where the journey
economis of scale is lost, then the transportation cost increases. The total number of logistics is the
entire inventory, transportation and facility costs.

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