Path: Services » Supply chain analysis/logistics advice » Supply chain network design

Supply chain network design

As the majority of the supply chain costs are locked in the infrastructure, network design is critical in order to realize step changes. Successfully designing and implementing a high performance network of facilities requires a combination of data driven engineering solutions, operations knowledge and breakthrough thinking capability. Facilitating contribution from all functional areas within an organization is also integral to designing a network of facilities that will service the entire supply chain. Building upon a 'hands-on' operations base, we have established a highly respected consulting capability in supply chain strategy and logistics.

What is Supply chain network design?

A strategic study to evaluate part or all of the supply chain footprint including:

  • Product sourcing costs
  • Inventory carrying costs
  • Fixed and variable facility costs
  • Inbound, transfer, and outbound transportation costs
  • Taking into account constraints like facilities (to be opened/to be closed), throughput capacities, customer service limits, product eligibility, etc.

Our network modeling technology of choice is a true optimizer ensuring that the generated solution represents the least cost solution. All costs and constraints including opening or closing facilities, throughput capacities, customer service limitations and product eligibility are utilized.

Although the project, network and strategic objective differs for each client, we utilize network modelling technology to define the optimal solution in terms of:
  • Number of plants and distribution centers
  • Location of plants and distribution centers
  • Product mix by plant and distribution center
  • Sourcing decisions for distribution center replenishment
  • Customer assignment to distribution centers
  • Evaluation of alternative transportation schemes
  • Evaluation of alternative distribution philosophies
  • Evaluation of customer service levels

Benefits include:
  • Typical savings between 5% to 15% of logistics costs including:
    • Transportation savings
    • Fixed facility cost savings
    • Labour savings
    • Inventory savings
  • Potential service improvements including:
    • Reduced order lead time
    • Improved order and line item fill rates.
  • Ability to quickly test alternative operating scenarios.
  • Reusable tool to model future business changes.
  • Itemized costing within the supply chain.
  • Catalyst for communication across the organisation.

Methodology network design

BCI uses a phased approach with clear deliverables per phase

Example network design Scenario assessment from a Financial and Service perspective

For each scenario BCI calculates the landed distribution costs, the service level achieved in the network, the distance to the customer base etc. The visual below illustrates the outcomes:

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