What Is Network Planning in Supply Chain?

What Is Network Planning in Supply Chain?

What is network planning in supply chain?

Network planning is the work of deciding where to place warehouses, hubs, and routes so a supply chain can serve demand at the lowest cost and the best speed. It is the strategic layer above day to day logistics.

What it isDeciding where things go

Where to place warehouses, hubs, and routes so a supply chain can serve demand at the lowest cost and the best speed.

Where it sitsThe strategic layer

Above day to day logistics.

How it is doneModeling and data

Rather than intuition. You simulate the options before you pour concrete.

How oftenA periodic review

Whenever demand, costs, or footprint shift meaningfully, not a one time setup.

The questions are big and expensive to get wrong. How many distribution centers, where, serving which regions, fed by which routes. Move a hub fifty miles and the cost of every future delivery shifts with it.

  • How many distribution centers
  • Where
  • Serving which regions
  • Fed by which routes

Because the variables interact, good network planning leans on modeling and data rather than intuition. You simulate the options before you pour concrete.

Figure 1. Network planning, from the questions to the decision

Network planning as this post describes it: the questions, modeling and simulating the options, deciding where warehouses, hubs, and routes go, and reviewing again when demand, costs, or footprint shiftThe questionsHow many distribution centersWhereServing which regionsFed by which routesModel and simulate the optionsModeling and data rather than intuitionDecide where warehouses, hubs, and routes goTo serve demand at the lowest cost and the best speedReview again whenever demand, costs, or footprint shift

Drawn from this post’s own text: the questions it lists, modeling and simulating the options, the decision, and the review it recommends. Nothing in it is a measurement.

Our partner NeoSOFT built a network planning tool for a logistics and supply chain operator, turning a complex modeling problem into a usable decision tool.

Related terms: transportation management system (TMS), route optimization.

How often should a company redo network planning?

Whenever demand, costs, or footprint shift meaningfully. It is a periodic strategic review, not a one time setup.

A one time setup

  • Set up one time

A periodic strategic review

  • Redone whenever demand, costs, or footprint shift meaningfully
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Related services: big data and analytics.

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