Supply Chain Decision Phases

Supply chain design is the process by which a company structures and manages the supply chain in order to identify the right balance between inventory, transportation, and manufacturing cost.

Supply Chain Design is being used to match the supply and demand under uncertainty by positioning and managing inventory effectively. In addition, uses resources effectively in a dynamic environment.

Three categories – Depending on the frequency of each decision and the time frame, over which a decision has an impact,

Supply chain strategy

Decides how to structure the supply chain over the next several years

• chain configuration,
• resource allocated and
• process at each stage should perform

Decisions include

• location and capacities of production and warehousing facilities,
• the products to be manufactured or stored at various locations,
• the method of transportation to be made available along different shipping legs,
• the type of information system to be utilised

Supply chain planning

Under the given configuration decisions are made which has impact on a time frame of

quarter to a year. It starts with a forecast the coming year or a comparable time frame.

Planning decisions include

• which market will be supplied from which locations,
• the subcontracting for manufacturing,
• the inventory policies to be followed, and
• the timing and size of marketing promotions

Companies in the planning phase try to incorporate any flexibility built into the supply chain in the design phase and exploit it to optimise performance. Companies define a set of operating policies that govern short-term operations.

Supply chain operation

Decisions are taken regarding individual customer order and the time frame is week or days. Configuration is fixed and policies are defined. Objective is to handle incoming customer orders in the best possible manner.

Decisions related with

• allocation of inventory or production to individual orders,
• set a date that an order is to be filled,
• generate pick lists at a warehouse,
• allocate an order to a particular shipping mode and shipment,
• set delivery schedules of trucks, and
• place replenishment order

Exploit the reduction in uncertainty and optimise performance