What is Supply Network Design?
Supply network design or Supply Chain Network Design is the process of designing and managing the flow of resources, information, and finances between organizations within the supply chain. The main goal of supply network design is to minimize cost and maximize service while meeting customer demand. This process includes numerous decision variables such as transportation mode, facility location, inventory management, and outsourcing.
Supply chain network design (SCND) is a complex task that requires the coordination of multiple organizations and resources. In order to optimize the flow of resources, information, and finances, supply chain professionals use various analytical tools and methods.
The most common analytical tool used in supply network design is linear programming. Linear programming is a mathematical technique that allows for the optimization of constrained optimization problems.
Another common analytical tool used in supply network design is simulation. Simulation can be used to test and evaluate different supply network designs. Supply chain professionals use simulation to understand the behavior of the supply network under different conditions and to identify bottlenecks and performance issues.
Supply network design is a critical part of supply chain management. An effective supply network design can improve the efficiency of the supply chain and the overall performance of the organization. It is an important tool for organizations to use in order to remain competitive in today’s global marketplace.
Benefits of Supply Network Design
There are many benefits of Supply Network Design, some of which are:
-Improved coordination between organizations within the supply chain
-Reduced costs
-Improved customer service
-Improved supplier relationships
-Increased profits
SND is a complex process, but the benefits are clear. By using this principle, organizations can improve their overall performance and competitiveness.
Challenges
The challenges of SCND are big, but not impossible to overcome.
The first challenge is complexity. SCND is a very complex task that requires coordination between multiple organizations and resources. Supply chain professionals need to use various tools and methods in order to optimize the flow of resources, information, and finances.
The second challenge is the global nature of Supply Chain Network Design. In today’s global marketplace, organizations must be able to design and manage their supply networks on a global scale. This requires coordination between different countries, cultures, and languages.
The third challenge is the ever-changing nature of supply chains. The world of business is constantly changing and evolving. Organizations must be able to adapt their supply network designs to meet the changing needs of the market.
Despite these challenges, Supply Chain Network Design is a critical part of supply chain management. Organizations that are able to effectively design and manage their supply networks will be at a competitive advantage in the global marketplace.
Factors to Consider
When designing a supply chain network model there are a number of factors that must be considered in order to ensure an effective and efficient design. Here are some of the most important factors to consider:
-The type of product or service being produced
-The geographical location of suppliers, manufacturers, and customers
-Transportation costs
-Inventory levels
-Production capacity
-Customer demand
Each of these factors must be carefully considered in order to create a supply chain network model that meets the specific needs of the organization.
Supply chain professionals use various analytical tools and methods to help identify the best possible solution for each organization.
Four Stages of Supply Chain Network Design
The four stages are:
-Planning
-Design
-Implementation
-Evaluation
Each stage of the process is important and must be completed in order to create an effective and efficient supply chain.
The planning stage involves the identification of organizational objectives and the development of a plan to achieve those objectives.
The design stage involves the creation of a Network Model that meets the specific needs of the organization.
The implementation stage involves putting the model into action.
Finally, the evaluation stage involves assessing the performance of the network and making improvements as necessary.
By following these four stages, organizations can create an effective and efficient Supply Chain that will help them improve their overall performance and competitiveness.
Who Should be Concerned by SCND?
The Businesses that should be concerned with the design of their supply chain are those that produce or move physical goods. This would include manufacturers, distributors, retailers, and logistics providers.
Any organization that is involved in the movement of goods from suppliers to customers should be concerned with the design of its supply chain.
Levels of Supply Network Design
There are three levels of SND. Strategic, tactical, and operational.
The strategic level of the Supply Chain Network focuses on the overall direction of the Supply Chain Network. It involves decisions such as what products or services to produce, where to locate suppliers and manufacturing plants, and how to distribute products to customers.
The tactical level of SND focuses on the day-to-day management of the Supply Chain Network. It involves decisions such as what transportation routes to use, how much inventory to keep on hand, and how to respond to changes in customer demand.
Finally, the operational level of SND focuses on the execution of Supply Chain Network operations. It involves decisions such as which orders to fill and when, how to load trucks for maximum efficiency, and how to schedule production runs.
What are the Four Pillars of Supply Network Models?
The four pillars of Supply Network Models are:
-Location
-Layout
-Inventory
-Transportation
Each of these pillars is important in the design of an effective and efficient Supply Chain Network.
The location pillar focuses on the placement of suppliers, manufacturing plants, warehouses, and distribution centers. The goal is to minimize transportation costs and maximize production capacity.
The layout pillar focuses on the physical layout of facilities. The goal is to optimize workflow and reduce material handling costs.
The inventory pillar focuses on inventory management. The goal is to minimize inventory levels while still meeting customer demand.
Finally, the transportation pillar focuses on the movement of goods from suppliers to customers. The goal is to minimize transportation costs while
Conclusion
Supply Chain Network Design is a process that helps organizations to create an effective and efficient Supply Chain Network. The process involves four stages: planning, design, implementation, and evaluation.
There are three levels of SND: strategic, tactical, and operational, and there are four pillars of Supply Network Models: location, layout, inventory, and transportation. Each of these pillars is important in the design of an effective and efficient supply chain.
To conclude, SCND can help organizations to improve their overall performance and competitiveness. Any organization that is involved in the movement of goods from suppliers to customers should be concerned with the design of its supply chain network.
