Chapter# 6 Supply Network Design · The supply network perspective, pp.148-151 ·  Deciding whether to outsource + table 6.1, pp.154-155 · The location of capacity, pp.156-160 · Weighted-score method, p161-162

Supply chain Network Supply chain management is defined as: the process of managing the entire chain of raw material supply, manufacture, assembly, and distribution to the end customer.

The supply Network perspective(pp-148-151) Supply network is the network of suppliers and customers operations that have relationships with an operation. Supply side is the chain of suppliers that provides parts, information and services to an operation. Demand side is the chain of customers that receive the products and services produced by an operations. First–tier is the suppliers and customers who are with immediate relation ship with an operation and with no intermediary relationship. Second-tier are the customers and suppliers who are separated from the operations only by the first tier suppliers and customers. Immediate and total supply networks.

Why consider the whole supply network There are three important reasons for taking a supply network It helps an understanding of competitiveness It help identify significant links in network It is focused on long term issues

Design decisions in supply networks There are three main decisions related to supply network How the network should be configured? either it should outsource or how much network should operations own. Vertical integration concept( do or buy decision) Where each part of the network should own by the company should be located? Location decision What physical capacity should each part of the network owned by the company have at any point in time. Long-term capacity planning decision.

Decide whether to outsource(p-154) If an activity has long-term strategic importance to a company, it is unlikely to outsource. Do it yourself( in house) or Buy it in( Outsourced supply may have effects of operations performance objectives. Table 6.1 Quality Speed Dependability Flexibility Cost

The location of the capacity(p-156) Reasons of location decisions are change in demand and supply A change in location may be prompted by customers demand shift. Change in volume of demand . To meet the high demand ( either expand existing site or choose a larger site in another location) another reason to change location is change in cost or availability od supply inputs. The objectives of location decisions are to achieve the balance between three related objectives Spatially variable cost Service the operation is able to provide its customers Revenue potential of the operations.

Supply and demand side factors in location decisions Labour cost Land cost Energy cost Transportation cost Community cost The Operation Demand-side factors Labour skills Suitability of side Image Convenience for customers

Location techniques( p-161-162) The weighted score method It is the technique to compare the attractiveness of alternatives location's that allocates a score to the factor that are significant in the decision and weights each score by significance of the factor It follows three main steps. Identify the criteria to evaluate various locations Establish the relative importance and give them weighting score Rate each location arbitrary ( from scale 0-100)