What are Supply Chain Network Design and How Does it Work?

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Cristyn Narciso
Cristyn Narciso
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I found this course very informative and easy to understand. I am just getting started in working with supply chains/manufacturing and enjoyed this free course.
Ankit Kumar
Ankit Kumar
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Very basic but yet an effective course. An easy explanation of different processes of a Supply Chain. The mentor has explained everything through pictures and flow charts which made it easy to understand. He has also provided the slides used in the course for later reference. Good for anyone who is new to the Supply Cain. I really wish him to create a more detailed and advanced course.
Laverne Angela Gadiah
Laverne Angela Gadiah
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Thank you for a very clear, easy to follow and concise course. It was informative and definitely on point.
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Principal keyword Supply Chain Network (SCN)


In this article, we would discuss the topic as to why the supply chain network (SCND) should form an integral part of your business. What they are, and how does it work. The tone of the article would be a mix of theory. And practice so that it not only enhances your knowledge but also you can apply to your business.

Why are supply chains critical?

Supply chains are critical as they form an integral part of not only in anyone’s business. But even in our day to day lives. As what we buy comes to us is intertwined into a supply chain network. And managing these networks is an evolving task for businesses to stay competitive.

What is a supply chain network design (SCND)?

A supply chain network design refers to the process of building and modeling a supply. Which would facilitate a better understanding of the costs and time associated, bringing the merchandise to the market with the available and resources and locations?

The result of a supply chain network design is to create a network that meets mission-critical business processes, which focuses on catering to the demand of the customers at the lowest possible cost.

The business processes evaluated based on:

  • Given the fact the networks fixed. How do you determine optimal product sourcing and inventory deployment rules by anticipating the demand of the customers?
  • Once the above is determined. How do you structure a logistic network under a framework a defined distribution strategy with the available transportation resources?

How does supply chain network work?

There is no universal model that applies here. As there is no single fit for all for a reason, different variables and models are available, which can be customized to suit your business. However, in all of them, there is a common element tying them, which is ‘location.’

They can be distribution centers, store networks.

There is yet another variable that comes into play here, which is the road network. It is determined based on the number of transportation resources, route, delivery time, etc. Wherein the ultimate objective is to design the ways by allocating the funds to various clusters and keeping in mind resources scarce.

The nature and functioning of supply chain network design based on

  • The logical clusters of stores with the application of appropriate clustering analytical tools. Spatial clustering analysis used to create a consistent grouping of stores for each route, for instance
  • Assigning of the groups to the nearest distribution center if that is what applies to your business
  • Optimizing of the routes with the aid of start/stop location to a list of other sites. Determine the time and distance of each of the ways to be covered.

In this article, we had covered several aspects relating to the supply chain network design.

The key takes away from this article is from a practical business application perspective. It is the location intelligence that plays a crucial role in a supply chain network design.  It is what helps in the finding and evaluation of better ways to serves the stores. And understanding as to how goods reach their final destination.

Common Keywords: NETWORK, SUPPLY, CHAIN, BUSINESS, Supply Chain Network Design, ROUTE, RESOURCE, STORE, ARTICLE, LOCATION, Supply Chain
Operations management, Lean Management






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