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Logistics Network Design#

Logistics Network Design relates to the establishment of supply, warehousing and distribution infrastructure. It encapsulates procurement, value-add and postponement activities and inventory control policies. Logistics Network Design seeks to minimize logistics cost while offering the right level of flexibility to meet service level requirements. A logistics network design initiative typically covers three elements - the inbound and internal supply chain, outbound logistics, and return logistics.

  • What is the optimal number and location of suppliers?
  • What is the optimal number and location of production sites, and what build strategy should be in place at each site?
  • What is the optimal number and location of distribution centers, and what level of activity should be carried out in each?
  • What should be the allocation of warehouses/distribution centers to product plants and allocation of customer demand points to warehouses/distribution centers?
  • What are the optimal transportation modes and routings to meet delivery requirements?
  • What return network should be in place, and what repair activity should be carried out in each site?

SimFlex Logistics Network Design Solution#

Numerous factors like number and location of sites, the volume allocated to each, activities carried out at each site, the frequency of shipments, and the transport mode(s) employed have to be considered in Logistics Network Design. Trade-offs between cost and service, lead times and inventory and more have to be properly balanced to ensure the network that best supports the business objectives is put in place.
SimFlex capabilities ensure that all of these factors are considered in finding the optimal network. In addition to basic network modeling features, additional features like transportation mode splits, schedules, consolidation rules and the ability to link to transportation rating engines incorporate real-world phenomena. SimFlex optimization engine can be used to find the truly optimal solution. Alternatively, simulation is used to compare a pre-defined set of alternative solutions or can be used in combination with optimization to test the robustness of the 'optimal' strategy to various changes in the supply chain.

It is important not to ignore the after-sales supply chain, where products need to be returned for repair and return, or swap and scrap/refurbish. A poorly designed reverse logistics network can have serious consequences for company profitability, especially in the case of product design flaws or component recalls. SimFlex Logistics Network Design solution enables reverse logistics network modeling independently or in conjunction with a forward logistics network.