Supply Chain Design

Supply Chain Design – Overall Considerations

In today’s’ business environment, firms are continuing to look for new ways to improve their network design and operations performance in order to increase customer satisfaction and to lower costs. Despite of it, in the business world, is rare to find a true fit between enterprise and supply chain strategy, and only few organizations have been able to marry their strategic goals with their operational capabilities. More over many operations are designed to maximize the throughput and reduce costs with few considerations for the impact in inventory levels, distribution capabilities and customer service levels. (Ganeshan, 1995).

An organization that does not design its supply chain, but simply allows the chain evolves through the time can expect poor coordination efforts, incompatible IT systems, long product cycle times, communication problems, high inventory levels , customer service issues and finally low profitability. Conversely, when a company’s supply chain design capabilities are directly aligned with its enterprise strategy, the results tend to be superior performance and a strong market position.

The goal of this paper is to present how supply chain design can impact a company performance. The concept of supply chain design will be described briefly, noting, why and when it is important for companies to embrace this strategy. Additionally some approaches of network design implementation also will be discussed.

To begin with: what is supply chain network design? This is relatively a new concept. Historically, the major considerations driving logistics network design were location demand, labor costs, material cost, and transportation cost. Harrison defines Supply chain (SC) as a” set of value –adding activities that connects a firm’s suppliers to the organization’s customers” and he classifies Supply Chain Management (SCM) in Supply Chain Design and Execution. (2001)

Supply Chain Design (SCD) is the...