Transportation Network Design Options
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.
(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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