Supply chain network design

What is supply chain network design?

A supply chain network is developed by connecting multiple supply chains. Whether that be supplier and consumer supply chains or your own supply chain, all these aspects come together to make up the design of the supply chain network.

The complexity and length of your supply chain network design can be determined by several key factors:

• The variations and complexity of products or services
• The number of available suppliers
• The types of raw materials required to produce the goods or service

• The geographical distance from supply source to the buyers or consumer location
• The methods and number of logistical routes

It’s then critical for supply chain managers to understand and be able to identify as much of the supply network as possible to mitigate risk exposure within the supply chain.

Supply chain network design challenges

As your supply network evolves, it’s important to recognise the challenges and how to deal with them. Some challenges to consider are:

• How to evaluate the influence and functionality of new technologies within your supply chain
• How to support change management, whilst increasing value in your supply network, when roles and responsibilities may change

• How to evaluate decisions in a dynamic supply network
• How the decision-making process will influence the supply network configuration

How to design a supply chain network?

A supply chain network consists of five fundamental components:

• Strategy:
  Having a strategy will drive your supply chain design based on business goals, objectives, market needs and expectations. Make sure to include the development and management of business processes, performance targets, organisation structures and information systems.
• Process:
  A process is required to operate and manage the supply chain. It’s important to also include links between processes and best practices for your organisation to adhere to.

• Model:
  Have a model in place that defines management structures, department missions and roles and responsibilities throughout your organisation.
• Information:
  Think about implementing some IT systems that will support your supply chain planning, execution, infrastructure maintenance and any decision-making process.
• Performance:
  Keep track of your performance to evaluate and manage your supply chain performance against your targets.

There are lots of different activities that you can implement to make sure your supply chain network is a success:

• Work collaboratively to deliver reductions in inventories
• Focus on channel wide cost efficiencies and adding value
• Consider the long-term time horizon (don’t just think about the here and now)
• Share useful information and data across all links to plan and monitor processes
• Coordination between multiple levels in firms and in the channel

• Ongoing joint planning between all links
• Reduced supplier, distributor, and logistics base to improve coordination.
• Channel leadership required for coordination
• Risks and rewards share over the long term

A total view should always be taken across the whole of your supply chain network, irrespective of whether these links are internal or external. All aspects of your supply chain network need to be actively managed, and performance measured.

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