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9 Cards in this Set

  • Front
  • Back
  • 3rd side (hint)

What is network planning?

The process by which the firm structures and manages the supply chain in order to:

- Find the right balance between Inventory -, Transport -, Manufacturing cost

- Match supply& demand

- Effectively utilize resources by smart sourcing(where do get what)

How to design a network - 3 Steps

1. Network design (infrastructure): years

- Number, locations and size of manufacturing plants and warehouses: infrastructure of the supply chain

- Assignment of retail outlets to warehouses

- Typical planning horizon = few years

2. Inventory positioning: monthly / weekly review

- Identifying stocking points, safety stock, push or pull

3. Resource allocation: monthly / weekly review

- Determine whether production and packaging of different products is done at the right facility: planning,

Supply chain master plan:coordinating and allocating production and distribution strategies

Design question More or less warehouses? (5)
Increasing # warehouses:

- An improvement in service level reduction in average lead time to customers

- An increase in inventory costs increased safety stocks required to protect each warehouse against uncertainties in customer demands (centralized / local inventory)

- An increase in overhead and setup costs

- A reduction in outbound transportation costs: transportation costs from the warehouses to the customers

- An increase in inbound transportation costs: transportation costs from the suppliers and/or manufacturers to the warehouses

Number of Warehouses (graph)

Step 1: Networking design

Key strategic decisions (6)

- Determine appropriate number of facilities such as plants and warehouses.

- Determine the location of each facility

- Determine the size as of each facility

- Allocate space for products in each facility

- Sourcing requirements: where are our suppliers / where is it produced?

- Determine distribution strategy: allocation of customers to each warehouse


Step 1: Networking design

Incorporate following features in optimization model: (6)

- Customer-specific service level requirement

- Existing warehouses

- Expansion of existing warehouses

- Specific flow patterns

- Warehouse-to-warehouse flow

- Production and bill of materials

Step 2: Inventory Positioning

- Manage inventory to reduce system wide cost(and increase customer service level)

- Decisions:

- customer order decoupling point (were push and pull meet) or CODP: e.g. make-to-order facility

- where to keep safety stock?

- Where to put the CODP (from order to stock focus)?

Step 3: Resource allocation

- Supply Chain Master planning

- How to use the resources you have

Supply chain master planning:

The process of coordinating and allocating production, and distribution strategies and resources to maximize profit or minimize system-wide cost

How to use the resources you have:

- Sourcing strategy

Where should each product be produced during the planning horizen

- Supply chain master plan

What are the production quantities, shipment size, and storage requirements by product, location, and time period

Network planning characteristics (picture)