Network Design is primarily concerned with decisions on the physical network i.e. location and capacity of factories and warehouses, what equipment, and who should make or store what for whom. Other elements of Supply Chain Design include the design of the processes, information flows and organisations to run the Supply Chain

Thus a Network Design study is an evaluation of the physical assets required and operating philosophy of a supply chain in order to determine a robust plan for the supply of a group of products.

A manufacturing network design study concentrates on the manufacturing elements. A distribution network design study concentrates on the distribution elements i.e. warehouses and transport.

Objectives

The objective of a manufacturing network design study is to recommend the following: WHICH MANUFACTURING SITES should supply WHAT PRODUCTS to WHICH WAREHOUSES (MARKETS) hence defining the CAPACITY/SIZE of the SITES. In some cases this is extended to include WHICH EQUIPMENT is used to produce WHAT PRODUCTS. The Manufacturing sites include existing factories, green- or brown-field sites and third party manufacturers.

The objective of a distribution network design study is to recommend the following: WHICH WAREHOUSES should supply WHAT PRODUCTS to WHICH CUSTOMERS (MARKETS) hence defining the CAPACITY/SIZE of the WAREHOUSES. In some cases this is extended to include WHICH MODE OF TRANSPORT is used to ship WHAT PRODUCTS.

The major activities involved in any network design study are:

- Agreement of a brief, including the objectives and scope
- Obtaining high level buy in (without this the project could be doomed to failure)
- Collection / Validation of data and information (large amounts of qualitative and quantitative information)
- Generation of assumptions (robust assumptions are required about a wide variety of potential futures)
- Identification of scenarios, including potential network options
- Identification of sensitivities to generate robust solutions
- Analysis of scenarios and sensitivities by a variety of tools as appropriate
- Report and obtain business commitment to recommendations.

Tools

Various modelling tools can be applied in the analysis phase of network design. These can range from the simple calculator, via one-off and generic spreadsheets to mathematical optimisation.