SCHOOL OF BUSINESS

MANAGEMENT
NAVI MUMBAI CAMPUS

Trim IV

Supply Chain Management

Network Design Strategy
Session 7

Prof. Anurag Garg

Network Planning

A process to design and plan the supply chain network in order to –

❖ Match supply and demand under uncertainty by positioning and managing inventory
effectively,

❖ Find the right balance between inventory, transportation and manufacturing costs,

❖ Utilize resources effectively by sourcing products from the most appropriate

manufacturing facility.
Network Design

Network design involves taking decisions and determining the following –

❖ Appropriate number of facilities like plants and warehouses.

❖ Location of each facility

❖ Size of each facility

❖ Layout and space utilization in each facility

❖ Sourcing required

❖ Distribution strategy.
Considerations for success in Network Design

Customer Service Factors Costs Factor

• Quick Response Time • Inventory costs

• Large Product Variety • Transportation cost
• Easy Product availability • Handling Cost including
• Order Visibility facilities cost
• Returnability • Information cost
Factors influencing Network Design Decisions

Socio-
Competitive
Economic
Factors
Factors
Macro-
Infrastructure
Economic
Availability
Factors

Technological Political
Factors Factors

Strategic Network Comparative

Factors Design Costs
Framework for Network Design
Data Collection and Aggregation

❖ Locations of customers, retailers, existing warehouses, manufacturing facilities and suppliers.

❖ All product details, including volumes and special handling needs ( e.g. refrigeration).

❖ Annual demand for each product, by location.

❖ Transport modes, rates, availability.

❖ Warehousing costs, including labour costs.

❖ Shipment sizes and frequency of delivery.

❖ Order processing costs.

❖ Customer service requirements and goals.

❖ Production and sourcing costs and capabilities.

Phase I – Supply chain Strategy

A. Organization's Competitive Strategy -

▪ Defines set of customer needs that it aims to meet through its products and services.

B. Value Chain Perspective –

▪ Product Development /manufacturing / sales & Marketing Strategy
▪ Supply Chain strategy and achieving strategic Fit.

Finance, Accounts, IT, HR

New Product Marketing
Operations Distribution Services
Development & Sales
Network Optimization models

• Which markets to address and what regions to go to ?

• Evaluate Regional Demands, tariffs, economies of scale
Phase II – and costs.
• consider regulatory environment, geo-political situation.

• Identifying and evaluating specific sites and locations for

Phase III & IV – facilities.
• Assessing all costs associated to a location.

▪ Use of Supply Chain Planning tools ( SCP tools) for Network configuration.
Thank You