A supply chain network design is an important consideration in any business organization. Leading organizations across the globe use their supply chains as strategic weapons for growth. Due to this, successful business organizations place significant emphasis on creating efficient supply chains (Walker 73). The goal of designing a supply chain network is to maximize returns while meeting the customer’s expectations.
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Factors to consider when developing a supply chain network design
There are several factors to consider when developing a supply network design. These factors depend on the nature of various business operations (Walker 74). In addition, they also focus on the objective of developing the supply chain design. Some of the critical factors include the following.
When developing a supply chain design, it is important to establish how the network will facilitate the company’s supply strategy. The role of this function is to establish the location of various facilities in relation to the network (Sople 187). In addition, this function helps the management to create a platform for designing a supply chain that will maximize profit. An efficient supply chain network will depend on the nature of business operations. Due to this, it is important to consider the nature of business operations when designing the network. This aspect will enable the developers to assign specific roles on various points of the network. Such a design provides the business managers with an opportunity to monitor progress within the supply chain.
When designing a supply chain network, it is important to consider the location of essential resources and facilities. These facilities include the warehouse, operation offices and employee centers. Locations within a supply chain design have cost ramifications. As a result, it is important to consider locations that do not have major cost implications on the business. The location of various facilities within a supply chain has a significant impact on the employees and communities. Having the right location sustains the supply chain in accordance with the business or organizational objectives. Other necessary factors to consider when looking at the facility location include availability of infrastructure.
The available infrastructure should address both the physical and informational aspects of the supply chain. Availability of resources is also a major factor to consider (Sople 190). This is because resources influence the sustainability of a supply chain. It is critical to establish the external or macroeconomic influences that enhance or hinder the network flow. These factors play a major role in determining cost implications of the supply chain.
Network capacity allocation
An effective network design should be able to sustain the required level of output. The capacity of a network design should ensure that the customers get the right allocation of products at the right time (Gattorna 221). Adequate planning ensures that the network design operates at an optimal level. An efficient network design avoids cases of underutilization and over allocation in the supply chain. Underutilization leads to lower returns on investment. As a result, the company or business is likely to experience losses. When a design is over allocated, customers suffer due to lack of efficiency in the supply chain.
As a result, frustration sets in leading to compromised standards. Over allocation of operating capacity leads to higher costs and as a result, a business utilizes the system at a minimal level. On the other hand, allocation of too little capacity results in constrained responsiveness in situations where there is high demand. Thus, it is necessary to develop a supply chain network that is flexible enough to address various situations.
The vision of the company
The vision of a business organization is a major consideration when developing a network design. Overall business objectives should offer insight into the type of network design developers should seek to create (Walker 200). Supply chains are strategic avenues that a company can use to grow. It is important to evaluate the position of the company before creating the design. In essence, a functional network design should fit into the general objectives of the company.
The nature of customers
When developing a supply chain network design, it is important to find out the nature of customers. Understanding the nature of different customers will enable the developers to create a network that addresses their needs (Sople 190). Effective supply chain network designs are flexible and respond to various customer needs. Such a network reduces conflicts and promotes the flow of products. As a result, the company is able to generate revenue and increase profits.
Supply chain network designs play a significant role in enhancing growth. When developing a supply chain network design, it is important to ensure that it addresses challenges that come with technology. Furthermore, the network is a weapon that a company can use to increase profits. When developing the design, it is important to put into consideration the prevailing market trends. Addressing these trends will enable the supply chain to withstand dynamic challenges facing distribution.
Gattorna, John. Dynamic Supply Chain Alignment: A New Business Model for Peak Performance in Enterprise Supply Chains Across All Geographies, London: Gower Publishing House, 2009. Print.
Sople, Vinod. Supply Chain Management: Text and Cases, New Delhi: Pearson Education India, 2012. Print.
Walker, William. Supply Chain Architecture: A Blueprint for Networking the Flow of Material, Information, and Cash, Florida: CRC Press, 2004. Print.