12-10-2012, 05:11 PM
THE ROLE OF NETWORK DESIGN IN THE SUPPLY CHAIN
THE ROLE OF NETWORK.pptx (Size: 163.91 KB / Downloads: 36)
Network design decision
Facility role:
Decisions concerning the role of each facility are significant
Amount of flexibility the supply chain has in changing the way it meets demand
Toyota before ’97, factories serving local needs. In Asian crisis late ‘90s, Asian factory experienced idle capacity that could not be used to produce for other markets. Afterwards, Toyota added flexibility to their plants so that they can serve other markets.
Facility location:
Very costly to open or close a plant
Toyota opened its first US plant in Lexington, Kentucky in ’88. This decision provided Toyota a low cost production option, especially when yen is strengthened against dollar, and responsiveness.
Amazon had to increase the number of warehouses to 6 to be cost effective in supplying books throughout US.
Factors Influencing Network Design Decisions
Strategic factors
Focus on cost leadership; apparel producers
Focus on responsiveness; Zara a Spanish apparel Prod.
Convenience stores; many facilities for responsiveness
Discount stores; few large facilities for effectiveness (low cost)
Different locations playing different role
Nike’s facilities in china and Indonesia produces lower priced shoes for mass markets, while its facilities in Korea and Taiwan focuses on responsiveness and produce higher-priced new design, with high variability
Offshore facility:
low-cost facility for export production.
An offshore facility serves the role of being a low-cost supply source for markets located outside the country where the facility is located.
The location selected for an offshore facility should have low labor and other costs to facilitate low-cost production.
many Asian developing countries waive import tariffs if all the output from a factory is exported, they are preferred sites for offshore manufacturing facilities.
Source facility:
low-cost facility for global production.
A source facility also has low cost as its primary objective, but its strategic role is broader than that of an offshore facility.
A source facility is often a primary source of product for the entire global network.
Source facilities tend to be located in places where production costs are relatively low, infrastructure is well developed, and a skilled workforce is available.
Many Chinese and Indian apparel manufacturers are attempting to transform into source facilities since the drop in apparel quotas in 2005
Contributor facility:
Regional production facility with development skills
A contributor facility serves the market where it is located but also assumes responsibility for product customization, process improvements, product modifications, or product development.
The Maruti facility in India today develops many new products for both the Indian and the overseas markets and has moved from being a server to a contributor facility in the Suzuki network.
Outpost facility:
Regional production facility built to gain local skills.
An outpost facility is located primarily to obtain access to knowledge or skills that may exist within a certain region.
The primary objective remains one of being a source of knowledge and skills for the entire network. Many global firms have set up outpost production facilities in Japan despite the high operating costs.