Supply Chain Network Design

A supply chain network design is a working model for a supply chain framework. It helps businesses to estimate the costs and resources required to create a product or service in a specific market. Having a supply chain network design can also help a business identify potential risks and inefficiencies in a supply chain. Additionally, businesses can use it to analyze possible operations costs to improve responsiveness and service before they cause losses.

Global Supply Chain Network Design Goals

A global supply chain design strives to optimize inventory, logistics costs, and capital. It can also make cost-saving opportunities more obvious, which reduces potential risks as they can be addressed earlier. Processes are modeled and mapped for the purpose of optimization of the supply chain network. This ensures that services are delivered, and operations are smooth.

Importance of Supply Chain Network Design

The vast majority of potential costs of a venture are determined through the supply chain network design. It can, therefore, be a costly mistake to skip the design step in the long run. A supply chain network map often results in questions about costs and the flows of production and supply. The supply chain can also influence the sustainability goals of enterprises. The effectiveness of the network must be established. Any overly high costs need to be addressed. It might result in companies questioning how much materials they order, the location of their warehouses, and the reasoning behind their specific set of suppliers.

Supply Chain Network Design Benefits

Having a supply chain network design laid out logically provides enterprises with the opportunity to see their supply chains clearly, which makes it easier to optimize them. When supply chains are optimized, services can be enhanced, costs reduced, risks can be mitigated, and the market can be reached quicker and more efficiently.

The key benefits of having a supply chain network design are simple. The visibility means that costs and capabilities can be directly compared to any benchmarks that have been set. The supply chain network also creates cost and process visibility. Customer satisfaction regarding delivery dates and expected service levels are easier to optimize. Fixed costs can be reduced in the network. Fuel costs can be optimized through transit and route optimization. Freight costs can also be reduced due to route optimization – getting to the final destination more efficiently. Inventory reduction can also mitigate high purchase costs through optimization.

Factors Considered in the Design of a Supply Chain Network Model

To begin with a supply chain network model, organizations need to establish a benchmark; in doing so, they need to consider several components.

Before the supply chain network is finalized and implemented, companies must start by defining their objectives. This will help establish the parameters of the model in terms of facilities, customer needs, inventory, and any capacity issues. Data collected must be collated so that data-driven decisions can be made in the future. Compare the model with historical scenarios and compare probable outcomes.

Types of Supply Chain Network Design

Before a business can settle on a supply chain network design, they must first have a good idea of the different types of networks they can choose from. There are three types of supply chain networks. These are as follows:

Identifying and Mitigating Risks

Hypothetical questions are posed, and an action plan is made to address the risks identified.

Tactical Network Design

This allows for the exploration of different ways to optimize a network. It also allows for short-term planning.

Strategic Network Design

Logistics like the location of facilities, warehouses, and production lines can be addressed. Transportation modes can be assessed, and all of these can be optimized for your business.

Considering Supply Chain Network Design a Core Process

A supply chain network is subject to various dynamic elements that continuously change and require continuous adjustment. Some of the dynamic elements that the supply chain is subject to are the weather, raw materials, suppliers, customers, the market, and the environment as a whole. This suggests that early supply chain models must be adjusted to remain valid. Keeping a supply chain model up to date ensures more accurate results and better output. Industry leaders consider supply chain design a top priority and a core process. Continuous focus on their models forms part of their daily operating systems.

Supply Chain Design as a Core Business Process

Exploring the models, plans, and examples other companies use to maintain their supply chain networks can help you where needed. Furthermore, having a designated consultant to manage your supply chain network design from planning to implementation will also help you maintain your competitive advantage in the supply chain. Planning should include the frequency of remodeling, critical issues, and plans to address issues related to production, demand, data, etc., should they arise in the future. Supply chain management should also have its own designated operations center where a multidimensional team can successfully manage your supply chain network design.

In recent years, the design and review of the supply chain have become an integral part of the business process. This is necessary for companies to maintain their competitive advantage. Despite this need, many businesses are put off by supply chain costs and have yet to upgrade their company processes to include supply chain review as a core process. Examples of where the focus of a supply chain network design model includes elements like bottlenecks within the supply chain, problems with distribution centers, and deficiencies in the supply chain processes, including manufacturing technology, design flow, service delivery, etc. Where supply chain design is optimized, business expectations can be exceeded, and your company can create a prosperous future.

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