Factors Influencing 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. 

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. 

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. 

Companies must consider competitors strategy, size, and location when designing their supply chain networks. A fundamental decision firms make is whether to locate their facilities close to or far from competitors. The form of competition and factors such as raw material or labor availability influence this decision. 

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