Know About Network Design in Supply Chain

Companies are considering network designs as the strategic solution to help the business in satisfying the customer demand, improve overall corporate performance and remain in the global market. Designing a supply chain network is a process which involves evaluating the alternative strategies and finally opting the one that gives maximum profitability and helps improve performance.

Network modeling helps to develop the implementation plans required to translate strategic decisions into reality. Modeling of supply chain network involves 3 phases:

In the Phase 1 the project team gathers the data about the validating operations and the costs in the present network system and these are used as bench marks against which all other options will be compared.

In the phase 2 high level models are built to test the potential and calculate the appropriate cost and service levels. Each scenario is tested for 'robustness' and in doing so, it serves to verify and validate the network model. Models are often estimated at the SKU level, with multiple time periods, and the entire end-to-end chains are evaluated.

Phase 3 involves the final selection of the network modeling and the justification of the selected network. The results must now be compared with the baseline in order to build the business case for change.

Supply chain network design projects are usually designed in few weeks and the payback is often realized within the first few months of implementation. The network modeling helps the business to reduce costs, improve customer service and it is also a great effect on the profitability of the company.

How To Reduce Lead Time In Supply Chain Process

The lead time may be defined as the time delay between the initiation of any process and completion of the same process. In a supply chain management process, lead time can be defined as the time from the moment the customer places an order to the moment it is received by the customer. In a supply chain management there are two types of lead times one is material lead time and the other is information lead time.

Material lead time:
Lead time is the time taken by the goods to get produced. Lead time of the transportation often depends on the mode of transportation. Faster transportation modes like airways, pipe, electronic transfer are used to reduce the material lead time in a supply chain.

Information lead time:
Information in the supply chain is used for planning, forecasting and also used to co ordinate daily activities. The information lead time can be reduced by employing electronic data interchange (EDI) because EDI does not employ human interpretation of data which reduces the information lead time.

Lead time can be separated into three components, the components are review time, manufacture time, transit time. Review time is the time taken for company to generate an order and review time can be reduced by placing the orders daily or weekly instead of placing the orders monthly and this has the direct effect on the reduction of the lead time.

Short lead times, have high degree of uncertainty and can force necessary inventories upward.