Professional Documents
Culture Documents
5-1
Outline
The Role of Network Design in the Supply Chain Factors Influencing Network Design Decisions Framework for Network Design Decisions Models for Facility Location and Capacity Allocation The Role of IT in Network Design Making Network Design Decisions in Practice
5-2
5-3
Cost
Central FG Central WIP Central Raw Material and Custom production Custom production with raw material at suppliers
Low
Low Response Time Hi
5-5
Number of Facilities
5-6
Transportation
Number of facilities
5-7
Cost of Operations
Transportation Labor
Number of Facilities
5-8
Phase I Supply Chain Strategy Phase II Regional Facility Configuration Phase III Desirable Sites Phase IV Location Choices
5-9
COMPETITIVE ENVIRONMENT
REGIONAL DEMAND Size, growth, homogeneity, local specifications POLITICAL, EXCHANGE RATE AND DEMAND RISK
AVAILABLE INFRASTRUCTURE
5-10
Conventional Network
Vendor DC Materials DC
Finished Goods DC
Customer DC
Customer Store
Vendor DC
Finished Goods DC
5-12
Phase III
Gravity location models: Goal is to identify suitable geographic location with in a region, that minimize the cost of transporting raw materials from suppliers and finished goods to the markets served.
5-13
Fixed facility cost Transportation cost Production cost Inventory cost Coordination cost
Which plants to establish? How to configure the network?
5-14
5-15
5-16
Do not underestimate the life span of facilities Do not gloss over the cultural implications Do not ignore quality of life issues Focus on tariffs and tax incentives when locating facilities
5-17