Supply Chain Network Design, its Role & Global Models – AIMS UK

This lecture is a part of supply chain courses , which are designed for the certification and diploma in supply chain management programs.

This is the process of expanding your existing supply chain to meet new demand while also taking into account factors such as lead time and transportation costs.

This is the process of reducing inventory by finding ways to reduce losses in transit or in storage. For example, purchasing smaller vials or using smarter packaging could both be effective ways to reduce shrinkage.

This is the process of optimizing your current supply chain network to make it more efficient while also taking into account factors such as distribution costs and lead time.

In general, there are following three main areas that you should focus on when designing your supply chain network:

The network design in supply chain 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.

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

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.

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.

Factors That Influence Supply Chain Design Decisions:

Here’s a look at the critical factors for network design in the supply chain.

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:

The size and frequency of the shipment are essential factors for determining the costs – the higher the frequency, the greater the cost; the smaller the shipment, the higher the cost.

5. Warehousing and Labour Costs:

Warehousing costs are fixed costs and are factored into the decision-making process. The labor costs are not fixed, and they play a role as well.

6. Trucking Costs:

The cost and type of trucking are of considerable importance.

7. Mode of Transportation:

Which mode of transportation is used in the running of the supply chain matters as well.