Professional Documents
Culture Documents
Network design of a SC has long term effect on SC performance Include location of facilities & allocation of capacity in light of;
Should focus on future more than the present Also important in case of merger
Important to identify the mission of each facility when designing the global network
Strategic Factors
Serves the local market & also customization, improvements & development Good server facilities change into contributor facility
Primary objective is to access local knowledge and skills for entire SC network Also plays role of server facility like firms in Japan
Technological Factors
Technology characteristics play a vital role Economies of scale, large investment lead to less global facilities Low fixed cost leads to more facilities Flexibility of technology impacts the degree of consolidation.
If local requirements vary, inflexible production technology will force to establish dedicated facility Flexible technology will help to consolidate production in more facilities
Duty to be paid when moving item across borders Low/free tariff/taxes result into decrease in facilities of firm but increase facilities in that region like Dubai Tariffs generally used by countries and firms for strategic purposes like China, USA (free trade zone) Greatly impact the profits like that happened to Yen Results in flexibility in SCN & some over capacity for cross utilization incase of demand/currency fluctuation
Facilities in a SC must at least equal the No that minimizes the total logistics cost
Aim of ND is to maximize firms profit while meeting customer needs ND decisions made in 4 phases Phase 1: Design a SC strategy
Identify firms competitive strategy Forecast evolution of local & global competition Identify internal constraints
Identify mode of action after growth in revenues Analysis of economies of scale/scope & financials
Hard Infrastructure; Utilities, suppliers etc Soft Infrastructure; Labor skill, community receptivity
Phase 4: Location Choices Precise selection & capacity allocation of facility Criteria only to maximize profits, minimize costs & utilize tax incentive (labor, material, site cost)