Network design decision

Network design decision - Supply Chain Management Network...

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Network Design in the Supply Chain Supply Chain Management 5-1
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Outline A strategic framework for facility location Multi-echelon networks Gravity methods for location Plant location models 5-2
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Network Design Decisions Facility role Facility location Capacity allocation Market and supply allocation 5-3
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Network Design Decisions Facility role: What role should each facility play? What processes should be performed at each facility? Facility location: Where should facilities be located? Capacity allocation: How much capacity should be allocated to each facility? Market and supply allocation: What markets should each facility serve? Which supply sources should feed each facility? (How many plants, DC’s, retail stores, etc. to build?)
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Factors Influencing Network Design Decisions Strategic Technological Macroeconomic Political Infrastructure Competitive Logistics and facility costs 5-5
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Strategy Considerations Understand where is the main emphasis: Cost leadership Responsiveness Product differentiation Who are the key competitors at each target market? Identify constraints on available capital Key mechanisms that will support growth Reuse of existing facilities Build new facilities Partner with other companies (mergers and acquisitions are potential options here)
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Costs and Number of Facilities Costs Number of facilities Inventory Transportation Facility costs 5-7
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Percent Service Percent Service Level Within Level Within Promised Time Promised Time Transportation Transportation Cost Buildup as a Function of Facilities Cost of Operations Number of Facilities Number of Facilities Inventory Inventory Facilities Facilities Total Costs Total Costs Labor Labor 5-8
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Cost / Responsiveness Trade-off Number of Facilities Cost Facility cost Inventory cost Transportation cost Total cost SC response time
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Regional facility configuration Important Factors: Regional demand Production technologies and economies of scale
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Network design decision - Supply Chain Management Network...

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