5-1
Outline
A strategic framework for facility location
Multi-echelon networks
Gravity methods for location
Plant location models
5-2
5-3
Factors Influencing
Network Design Decisions
Strategic
Technological
Macroeconomic
Political
Infrastructure
Competitive
Logistics and facility costs
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5-4
Number of Facilities
2007 Pearson Education
5-5
Customer
DC
Customer
DC
Customer
DC
Customer
DC
Customer
DC
Costs
Transportation
Number of facilities
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Total Costs
Percent Service
Level Within
Promised Time
Facilities
Inventory
Transportation
Labor
Number of Facilities
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A Framework for
Global Site Location
Competitive STRATEGY
INTERNAL CONSTRAINTS
Capital, growth strategy,
existing network
PRODUCTION TECHNOLOGIES
Cost, Scale/Scope impact, support
required, flexibility
COMPETITIVE
ENVIRONMENT
GLOBAL COMPETITION
PHASE I
Supply Chain
Strategy
PHASE II
Regional Facility
Configuration
PRODUCTION METHODS
Skill needs, response time
REGIONAL DEMAND
Size, growth, homogeneity,
local specifications
POLITICAL, EXCHANGE
RATE AND DEMAND RISK
PHASE III
Desirable Sites
FACTOR COSTS
Labor, materials, site specific
PHASE IV
Location Choices
AVAILABLE
INFRASTRUCTURE
LOGISTICS COSTS
Transport, inventory, coordination
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Conventional Network
Materials
DC
Vendor
DC
Vendor
DC
Vendor
DC
Finished
Goods DC
Customer
DC
Customer
Store
Component
Manufacturing
Customer
DC
Plant
Warehouse
Components
DC
Final
Assembly
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Customer
Store
Finished
Goods DC
Customer
Store
Customer
Store
Customer
DC
Customer
Store
5-14
Local DC
Cross-Dock
Store 1
Customer 1
DC
Local DC
Cross-Dock
Customer 2
DC
Regional
Finished
Goods DC
Local DC
Cross-Dock
Store 1
Store 2
Store 2
Store 3
Store 3
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5-16
5-17
5-18