Transportation Network Design Options
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Classical economists neglected the importance of facility, location and overall network design Economists, when originally discussed supply – demand relationships, facility, location and transportation cost differentials were assumed to be non existent or equal among competitors.
- The number, size, geographical relationship of the facilities are used to perform logistics operation directly affect customer service capabilities and cost.
- Network design – primary responsibility of logistics.
- Typical logistics facilities are manufacturing plants, warehouses, gross dock operations and retail stores.
- Determining
(i) How many of each facility are required
(ii) Their geographic location
(iii) The work to be performed at each is a significant part of network design.
- In specific situations facility operations may be outsourced to service specialists.
- No matter who does the actual work, all facilities must be managed as an integral part of a firm’s logistical network.
- You have a network for internal customers, external customers as well as suppliers. Suppliers should be made to understand what their commitment is and follow it. You have to co-exist with your suppliers and share information with them.
- Network design must take into account geographical location because a great deal of variation exists between different geographical markets. If you set up your base in a place where your demand is high then after a while the demand shifts and come from another location, then again you are in a dilemma.
In a dynamic, competitive environment
- Product assortment
- Customer supplies
- Manufacturing requirements
All of the above are constantly changing. However re-location of all logistics facilities at one time is inconceivable. Relocation or redesign of specific facilities is possible.
Over a period of time, all facilities should be evaluated, to determine if their location is desirable.
Selection of a superior location network can provide the first step.
Your network of facilities forms a structure from which logistical operations are performed. Your network should incorporate transportation and information. Specific work tasks related to network design are processing customer orders, management of inventory, material handling.
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