Factors Influencing Supply Chain Design Decisions

To create a supply chain network design for any organisation, several factors must be considered. These are: 

Set goals and objectives, and gain buy-in

It is critical to have a clear understanding of the organisation’s goals and an honest appraisal of the time, effort, and cost. Supply chain network design is not an isolated activity; it must encompass all functions involved in the purchase, manufacturing, sales, and delivery of goods. It is vitally critical that the CEO and the board commit at the highest level. A pilot project that considers one aspect or section of the organisation may be required to illustrate the advantages of supply chain network architecture.

Creating a competent team for supply chain network design

Aside from high-level backing, SCND’s success is dependent on assembling a team with the necessary expertise, abilities, and commitment to carry the project through. At the absolute least, a full-time project leader and a small project team comprised of persons who together have a solid understanding of the supply chain, the organisation, and a vision of what they want to achieve are required. When necessary, key executives and supply chain workers must also be involved.

Defining the existing supply chain design

The first objective is to thoroughly define the existing supply chain network. This is a crucial, though time-consuming, procedure. The degree of information necessary varies depending on the sort of domain. However, it’s best to work with the most detail feasible because it implies fewer mistakes. Item, supplier, location, pricing, distance, shipment method, and restrictions such as capacity, lead time, and flexibility are all typical pieces of information. Begin with the material list. Much of the necessary data will be available in the organisation’s MRP and ERP systems.

Modelling the supply chain

This data is then loaded into optimisation modelling software, which generates a thorough mathematical model of the organisation’s supply chain. The advantages of drag-and-drop modelling are evident here, as it takes less time to develop the model, and much of the job can be completed by staff with no formal training. A collaborative method speeds up model preparation.

After establishing and modelling the supply chain, the next important activity is data preparation. Most organisations have an array of data. However, new data sources, particularly those pertaining to projections and future market patterns, may need to be found and collected. Various filtering techniques must be used to clean and prepare these data streams for utilisation. Missing data is just as crucial as incorrect data. After preparing the data, it may be put into the model.

Validating the supply chain model

The model must be validated. Certain features of the model will not be clearly evident regardless of how it is created; thus, it is essential to use historical scenarios and compare the model output with a known result. Model validations are significant in two ways. The model must be able to anticipate what will happen given a known set of inputs. It must also be adjusted to produce comparable results in terms of financial numbers and volume. This crucial stage instils trust and credibility in the approach.

Skills and knowledge should be transferred

The process of supply chain design should be ongoing; it is not a one-time event rather one that is used continuously. As a result, it is critical that organisations internalise the skills and information required to further construct and modify supply chain network models. This is true regardless of the type of vehicle. If models are hard-coded using a modelling language, competency must be transmitted and institutionalised so that the organisation is not reliant on one or two persons who may (and will) leave at some point. Similarly, continuing to rely on vendor support is costly.