Supply Chain Network Planning

Question 1

What are the key strategic decisions?

Answer 1

• Pick the optimal number, location, and size of warehouses and/or plants
• Determine optimal sourcing strategy
  
  • Which plant/vendor should produce which product
• Determine best distribution channels
  
  • Which warehouses should service which customers

Question 2

What is the objective in SC network?

(Meaning, what need to be balanced?)

Answer 2

• The objective is to balance service level against
  
  • Production/ purchasing costs
  • Inventory carrying costs
  • Facility costs (handling and fixed costs)
  • Transportation costs

–> That is, we would like to find a minimal-annual-cost configuration of the supply chain network that satisfies product demands at specified customer service levels.

Question 3

What are the major components of the network design tools?

Answer 3

• Mapping
  
  • Mapping allows you to visualize your supply chain and solutions
  • Mapping the solutions allows you to better understand different scenarios
  • Colour coding, sizing, and utilization indicators allow for further analysis
• Data
  
  • Data specifies the costs of your supply chain
  • The baseline cost data should match your accounting data
  • The output data allows you to quantify changes to the supply chain
• Engine
  
  • Optimization Techniques

Question 4

which one is more effective?

Answer 4

The answer is that it depends on the objective. In the map on the right the objective is service (reduce response time to the customers) while in the map on the left the objective is to minimize total cost