3.2 Network DesignPhysical configuration and infrastructureof SCA strategic decision withlong-lasting effectsWarehousesandSuppliersManufacturersCustomersdistribution centersManufacturing costsTransportation costsMaterial costsTransportation costsInventorycosts6
6 3.2 Network Design Physical configuration and infrastructure of SC A strategic decision with long-lasting effects
Reevaluation of InfrastructureChanges in:demand patternsproduct mixproductionprocessessourcing strategiescostof running facilitiesMergers and acquisitionsmay mandatethe integration of different logisticsnetworks
7 Reevaluation of Infrastructure Changes in: demand patterns product mix production processes sourcing strategies cost of running facilities. Mergers and acquisitions may mandate the integration of different logistics networks
Key Strategic DecisionsDetermining:the number of facilities, (plants,warehouses,...)the location of each facility.the size of each facility.space for products in each facility.sourcing requirements.distribution strategies, i.e., the allocation ofcustomersto warehouse8
8 Key Strategic Decisions Determining: the number of facilities, (plants, warehouses,.) the location of each facility. the size of each facility. space for products in each facility. sourcing requirements. distribution strategies, i.e., the allocation of customers to warehouse
Objective and Trade-OffsObiective:Designorreconfigurethelogisticsnetwork inorderto minimize annualsystem-widecostsubjectto avariety of service levelrequirementsTrade-Offs:Increasingthenumber of warehousesyieldsimprovingincreasingservice levelinventory costsData?reducingoverheadCosts?outboundcostssetup costsinbound costsO
9 Objective and Trade-Offs Objective: Design or reconfigure the logistics network in order to minimize annual system-wide cost subject to a variety of service level requirements Trade-Offs: Increasing the number of warehouses yields increasing • inventory costs. • overhead • setup costs • inbound costs reducing outbound costs improving service level Data? Costs?
3.2.1 Data CollectionWhat data?Howto collect them?Howto processthem?10
10 3.2.1 Data Collection What data? How to collect them? How to process them?