Network design decisions factors

There are many aspects which effects customer service. Some of them are directiy influenced by the structure of the distribution network [3] response time, product variety, product availability, customer experience, time to market, order visibility, and retumability. These factors, as explained below, affect supply chain network design decisions. 

Identify factors influencing supply chain network design decisions. 

In this chapter, we start with the broad supply chain design discussed in Chapter 4 and focus on the fundamental questions of facility location, capacity allocation, and market allocation when designing a supply chain network. We identify and discuss the various factors that influence the facility location, capacity, and market allocation decisions. We then establish a framework and discuss various solution methodologies for network design decisions in a supply chain. 

Following a merger, consolidating some facilities and changing the location and role of others can often help reduce cost and improve responsiveness because of the redundancies and differences in markets served by either of the two separate firms. Network design decisions may also need to be revisited if factor costs such as transportation have changed significantly. In 2008, P G announced that it would rethink its distribution network, which was implemented when the cost of oil was 10 per barrel. ... 

In this section we examine a wide variety of factors that influence network design decisions in supply chains. 

Macroeconomic factors include taxes, tariffs, exchange rates, and shipping costs that are not internal to an individnal firm. As global trade has increased, macroeconomic factors have had a significant influence on the success or failure of supply chain networks. Thus, it is imperative that firms take these factors into account when making network design decisions. 

Identify factors influencing supply chain network design decisions. Broadly speaking, network design decisions are influenced by strategic, technological, macroeconomic, political, infrastructure, competitive, and operational factors. 

The objective of using a mathematical optimization model is to identify network design alternatives that best exploit structural cost differences between various locations and resolve trade-offs between different cost elements such as production cost advantages and additional transporta-tion/tariff costs. Therefore, relationships expressing the costs that will be incurred as a function of cost drivers (decision variables of the model) have to be established. A proper creation of these cost functions is a critical success factor of the overall analysis (cf. Shapiro 2001, p. 234 Vidal and Goetschalckx 1996, p. 13). 

Chopra and Meindl (2010) suggest that supply chain network design encompasses four phases Phase 1— Supply Chain strategy. Phase 2— Regional facility strategy. Phase 3—Desirable sites. Phase 4— Location choices. They also suggest a number of factors that enter into these decisions. We discussed models and methods for Phases 3 and 4 until now. We shall now address the first two phases. 

Decisions related to supply chain network design may also require the modeler to consider strategic factors to open new markets, to increase market share, and to strengthen relationships with customers. This model includes measures for strategic factors for each facility, based on the ratings provided by the decision makers. A goal constraint is set to achieve the maximum possible overall strategic measure for the entire supply chain network. 

Design control systems Based on knowledge of those relations, we investigate the possibility of monitoring corresponding determinant factors and predicting potential deviations in the actual food supply networks, and proactively control deviations with appropriate decision varieties. 

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