So when we talk about supply chain design, what do you mean by that?
Well, first, let's define the supply chain.
Supply chain is the series of players that transfer the product from the point of origin to the point
of consumption and wiring.
By players, I mean suppliers, the production team or the production people, and then the storage
team and the transportation team within the players and then the distribution to distribution center
and then the retailers, the stores where there are sales people and sales representative that sell
the product to our customers.
Those are players.
And it can be a vertical supply chain where everything is owned by one player.
We can think about Zahra because Zahra owns the stores or the man that owns the manufacturing, owns
the transportation and so on.
Or we can think about a multiplayer multiplayer supply chain like Apple, where they have the manufacturing
made by a Chinese company and the design is made by them.
The marketing can be made by a third party and the setting is made by Apple as well.
But they have also third party providers.
So this is like a multiplayer supply chain.
And when we talk about design, we talk about where to put the facilities of our supply chain.
Shall we put it in one place to minimize the transportation cost, or shall we put it in distant places
where, for example, the suppliers have low labor costs and have low taxes?
Or shall we put it near to our customer so we can reduce our transportation and better serve our customers?
So you see, it's kind of a balance between the service level we want to provide and the reduction of
cost that we want to achieve.
Right.
And in supply chain design, you can have the suppliers owned by you or you can own the supply, the
raw material side, or you can give it to a third party suppliers.
You can have a raw material warehouse or you can choose to store at a third party logistics provider.
You can own the manufacturing or you choose to outsource the manufacturing like Apple did, for example.
Right.
And then we have the finished goods distribution center and distribution center.
But what it does is that it combines the transportation coming from the facilities and then it sends
to the customer by this.
This is a way of reducing the transportation cost because this is instead of sending from the production
facility immediately to the retailers or to the customers.
And this means more transportation cost.
So it's a way of consolidation, right?
So all of the companies that are focused on design talk about how many warehouses should we have, how
many distribution centers should we have, how many production facilities should we have from where
to get our raw materials?
All of these questions come into the supply chain design.
Also the selling part.
Shall I have shops, stores or shall I sell online or shall I sell by click and collect?
So you click into a you buy from the website and you collect at the designated place, for example,
or I deliver to customers.
This is my value proposition that I deliver to customers door to door.
And based on this we are selling the design structure.
For example, if I'm delivering door to door, that means I don't need stores.
So I'm sitting on the store side, but increasing the spend on the delivery side.
And if I'm selling in stores only in retailers only.
So I'm not investing in websites and not investing in delivery vehicles to the customers.
Right.
These kind of decisions we have to make and all of this under the umbrella of strategy.
What is your strategy?
And based on your strategy, you design your supply chain.
And in this course we will look at the different designs based on different strategies.
So if you want to, for example, have a high service level strategy in your supply chain, then you
would make a lot of warehouses in proximity or near your customers.
But if your strategy is reducing the cost, then you will reduce the number of warehouses that you have
to reduce the cost and then you will have more transportation time for delivery to your customers.
So by this, this is the tweek and playing in the design to meet the strategic.