Basic network design will optimise the movement of goods and information through your supply chain and distribution networks: in short, it will help you to break any gaps between you and your customer for the lowest possible cost and risk. The process will involve mapping your organisation’s physical and information networks, from the location of your warehouses and modes of in-bound transport, to your IT systems, and then assessing these networks’ capacity, adaptability and costs. A basic network design will then be produced on the basis of this data, as well as your business’s current levels of skill, service-levels and, most importantly, its business development strategy. A basic network design will then enable your business to respond more flexibly to customer needs, and show you how current and emerging technology will help you to meet business growth targets. This process is especially helpful if your business has recently taken on an acquisition or a merger, and if it is expanding into new markets or new product ranges. It is also essential if you want to reduce your supply chain complexity and costs and can help you respond to changes to markets and regulations.
Different types of network design
A network design can be developed to model the most straightforward logistics system of factory to consumer, or complex multi-channel strategies that incorporate global supply chains and in-store and online purchases. It can incorporate specified service levels and costs, and can help to determine any variable, including:
- The ideal number, capacity and location of each of your plants, warehouses and distribution
- The right modes and lanes of transportation for your products
- In-house versus outsourcing options
- Make or buy options and implications
- Information systems for effective decisions
- How to best serve your customers in specific locations
- Service and costs trade-offs
- When and how to expand capacity
These variables and many more can then be evaluated in terms of operating cost, capital expenditure, risk, degree of change, flexibility, and skills.
How network design benefits a company
Every decision you make about a supply chain will impact on your service levels, profitability and competitive edge. A basic network design will work with your business growth strategy and help you to overcome any logistics challenges you face. It will improve your operating performance, help you to avoid unnecessary costs, and increase your ability to respond to your customers’ needs.
A basic network design can help you to:
- minimise the costs of transportation, manufacturing, inventory and raw materials
- Improve your understanding of customer service needs and options
- Improve your understanding of service costs
- Develop the balance of your storage, inventory and transport costs
- Maximise your existing infrastructure
- Minimise capital expenditure costs and realise synergistic opportunities across channels
- Allow you to conduct customer profitability analyses in terms of time-to- serve and cost-to- serve
In an age of business integration across multiple channels with global sourcing of products and information, your network design will ensure that your supply chain and logistics network is robust to meet future challenges.