What is supply chain network design and why is it important?

Fri, Feb, 2023 | Uncategorized

What is supply chain network design?

Supply chain network design is the process of building and modelling a supply chain to better understand the costs and time associated to bring goods and services to market within an organisation’s available resources.

 

Why does my business need supply chain network design?

The supply chain network becomes increasingly complicated and web-like as it becomes more detailed. Supply Chain Network Design provides an operating framework for the entire business to help guide management with strategic decision making.

It also examines the structure from a strategic perspective, considering external influences, process interdependencies, and critically evaluate opportunities to maximise profitability. Therefore, it shows the connections between organisations as well as how information and materials travel between them.

 

What is the difference between supply chain and supply network?

What is a supply chain?

A supply chain is the network of all the individuals, organisations, resources, activities and technology involved in the creation and sale of a product. A supply chain encompasses everything from the delivery of source materials from the supplier to the manufacturer through to its eventual delivery to the end user.

What is a supply network?

A supply network is developed by connecting multiple supply chains. The term “network” refers to a more complicated structure in which organisations are interconnected and there are two-way exchanges between them.

So, what is the difference?

In conclusion, both a supply network and a supply chain define the flow and movement of resources and information by connecting organisations together to serve the end client. Networks relate more to complex structures, while chains relate simply to sequential set of nodes and links.

 

What are the challenges when designing a supply network?

As the supply network evolves, the following challenges may arise; how these actions are assessed and developed will have an impact on the supply network’s transformation.

  1. What criteria to use to evaluate the impact and functionality of innovative technologies in the supply chain configuration process
  2. When roles and responsibilities may change, how can you support change management while enhancing value in the supplier network?
  3. How to evaluate judgments in a dynamic supply network and how the decision-making process affects supply-chain configuration
  4. High cost/low availability labour
  5. Company specific requirements

 

6 steps to effective network planning

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Orient the project

The goal of this step is to determine the project’s scope and to set essential deadlines and milestones.

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Find and define the variables

This step is about developing a modelling framework for the variables and trade-offs.

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Analyse the sensitives

This process produces a validated model approach that accurately reproduces the company’s present performance.

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Create scenarios

The company models the results for alternate network plans in comparison to the baseline in this step.

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Consider your options

The project team will choose a network plan from among the alternatives during this phase.

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Detail and do

The team build a thorough protocol for implementing the chosen network plan in this last step.

 

What factors influence the supply chain network design

Below are several elements that influence the supply network’s complexity and length.

  • The complexity and variety of products or services.
  • The number of providers available.
  • The types of raw resources needed to make the items or supply the service.
  • The distance between the supply source and the purchasers’ or consumers’ location.
  • The methodologies used and the number of logistical routes available.
  • The methodologies used and the number of logistical routes available.
  • Government policies in which products, warehouses, etc. will be placed.
  • Political climate
  • Policy and laws on foreign investment, foreign exchange, and repatriation.

Need help getting started?

Our Network Design specialists are equipped with the knowledge and business tools to determine the optimal number, location, and size of facilities.

Our technology enables transparency, whether you want to secure your production supply, optimise your distribution network, or monitor and control the capacities of your supply chain. We support a variety of programs ranging in scale from department specific improvements to full blown supply chain network design and optimisation programs. We work in line with relevant industry peer companies, operating expenses and invested capital profiles.