Elements in Supply Chain Design

Answer

Elements in Supply Chain Design

            The fundamental premise of an effective supply chain is that whose design is founded on market requirements – a phenomenon calling for integrated understanding of the nature of the market before designing a befitting supply chain. A genuinely effective supply chain is designed in a model that is planned and purposive, as the need to optimize the time and costs associated with bringing goods to the market is integral (Melnyk, Narasimhan, & DeCampos, 2014). Therefore, the essence of the approach presents weighty opportunities for decision making, whether strategic or tactical, since the approach also enhances market forecasting and projections. There are three distinct elements in supply chain design: supply network, assembly, and distribution – these elements are discussed in this paper.

Supply Network

            Basically, supply network refers to the embedment of organizations together to serve the final customer, usually in sub-contractual commitment to supply nodes of one company’s product(s). The supply chain network is designed based on the product architecture – the process of piecing the product’s parts together and disassembling (Das, 2015). The decision to outsource a product’s parts to suppliers is dependent on the product’s nature, as those whose designs are modular are best suited for outsourcing as their varied units can be manufactured in different locations independently then assembled centrally. This is contrary to how complex products with highly integrated units are handles, presenting difficulty of outsourcing. Another factor that influences outsourcing is module criticality, as companies would see greater viability in doing in-house manufacturing for more critical parts in the process of optimizing strategic and operational resilience. The choice between efficiency and agility is another issue in designing supply network, as supplier proximity to the market is a factor in case of agility (fickle consumer preferences) to strategically shield the company from unforeseen loss-potential market forces, while lean supply networks lack the intricacies of agile ones since they focus on single sourcing. Further, an alloy of lean and agile supply networks is at times developed to meet the complexities of a specific market’s demands.

Assembly Network

            Assembly network involves the aspects of choices regarding type and location of product’s assembly points, for instance, products with few variants can be centrally assembled. The intricate relationship between time and cost sometimes present a paradox that is only solved by the product’s sales results, hence the determination of assembly point. Though functional and hybrid products can be stocked due to their stable demand, the dynamism of innovation and product designs call for mixed model centralized assembling where aspects like cheap and available labor pools are assured. 

Distribution Network

            The final element in the supply chain design is integral in the integration, as it is concerned with where and how the product is to be stored and distributed. The process cuts across, as product’s storage and movements take place all through the cycle of the supply chain, beginning at the manufacture ring facility to the selling point. Material in a traditional supplier(s)-manufacturer-distributor-dealer-retailer network goes through multiple hand-off points (nodes), leading to buildup of inventories as the material is handled and stored. As the consumer is generally accustomed to ready availability, manufacturers or assemblers often do direct supply to few selected distributors to mitigate the daunting complexities of logistical costs and management of more integrated direct distribution along the chain. Time has seen the evolution of distributors that have challenged the conventional manufacturer-distributor-dealer-retailer distribution chain, in spite of its obvious advantages. The new models practiced by e-commerce players and multi-leveled chain stores cut the process, hence reducing the costs and inventories (Das, 2015). The underlying factor in distribution network is that the nature of products generally determine the level of its flow in the template distribution chain network.