Supply Chain Network Design Factors

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Design of Supply Chain Network is done for optimizing with the adoption of new technology. Optimization involves finding the best possible solutions rather than improving and enhancement of supply chain. Optimization often involves finding out how many warehouses an organization should have, where should be the location of the warehouse, what kind of products should be assigned to each warehouse and where should a typical customer buy a product from.

The process of design of Supply Chain Network is done once in a while and the outcome of an optimized design model can save cost to a great extent. The important factors of Supply Chain Network Design are as follows.

1. Location
The Location of various elements and the distance between is crucial for fining the basic structure of supply chain network. Location of customers, location of suppliers, location of warehouse and location of manufacturing plant along with distance among them is important. The distance from the availability of transportation services like seaport and airport are also important factors.

2. Demand
After fixing the locations and finalizing the supply chain network it is essential to concentrate on current demand and demand that may arise in future. It is also essential to group these demands effectively for good supply chain design.

3. Service
The next thing in supply chain design is finding out the maximum allowable time for transit and maximum allowable distance for giving the services.

4. Shipment
The size of the shipment and the frequency of shipment are two important factors as far as supply chain is concerned. This is because these two factors alone can have considerable effect on cost. Even though warehousing cost is fixed the labor cost for shipment is also important as it is varied over time.

5. Transportation
It is essential to optimize the mode of transportation which is less costly as well as not time consuming. Total cost of transportation and choosing the trucking costs should be made into a model for further assessment. Possible alternatives if any of the transportation is having problems also need to be checked in supply chain design.

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