Supply Chain Design
Supply chain design is considered both an art and a science. A science, because the results of different choices can be quantified with an extreme degree of accuracy. And an art-form, because the future is uncertain, and hence so is the market that you cater to. Designing a supply chain is a necessity for all businesses that manufacture products. And there are several instrumental sections of the same that need to be perfected.
We can break every effective Supply Chain into four core elements. The Physical Flow of goods, The Financial Flow of working capital throughout the supply chain, the flow of Information, and finally the Design of the organization as a whole.
Designing Physical Flows –
➤ Designing Physical Flows involves the flow of materials through the supply chain. It includes modeling problems that the Supply Chain might face (transportation and transshipment problems, problems in location of storage facility, and Supply Chain Network Design Problems.)
➤ The next step is to find the solutions to these problems by finding the integral balance between cost and level of service and optimizing mixed integer linear programs.
➤ Once the solutions to preexisting flaws are found, the next step is to interpret and implement the solution into the supply chain.
➤ Integrating and implementing the solution delves deeper into the supply chain, to test the scope of the solution by conducting a sensitivity analysis of the same.
Optimization is used as a tool to support decision making, and real world network design projects are employed.
➤ A perfectly designed Physical flow allows for smooth flow of product from the manufacturer to the customer.
Designing of Financial Flows –
Designing financial flows in a supply chain involves segregation of inventory levels by type. Raw materials, Work In Progress and finished goods. It is, however, not confined to this. Investment in Labor, Equipment, Software and Hardware systems, all go into this. Outsourcing and Insourcing of critical processes also go into this list.
A well designed one deals with translating all this data into the language of the Chief Financial Officer. Translating the raw data, into profit and loss income statements, asset and liabilities balance sheets, and cash flows. Three main tools are used to design a robust supply chain at this point. Activity based costing, Working Capital and Discounted Cash Flow Analysis.
Design of Information Flows –
A Well designed information flow, is worth more than two in the bush. Creating and managing one however, is the tricky part.
Involving data about everything from Sourcing, to Manufacturing to Delivery. It is a process that starts with suppliers and ends with the customer. Optimal Procurement strategies, risk sharing and supply contracts. The challenges and obstacles your organization might face every step of the way.
The customer plays a major role in this. With effects like the bullwhip effect telling the inefficiencies of a supply chain. In the end it is the consumer who decides whether or not to consume, the decisive factor that can make or break your supply chain.
Design of the Organization –
➤ The most key part of the four steps that goes into designing a successful Supply Chain, is designing the processes that build the organization.
Which is where we come in!
By refurbishing your existing business strategies and Organizational Structure.
A job that has us take apart all your Business and Supply Chain Processes and Performance Metric Systems, by defining how your supply chain function should be organized.
Welcome to Chools! Visit us at www.chools.in to know how you can take a fresh look at your Supply Chain Design.
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