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Network Planning - Inventory positioning and logistics coordination - Integrating inventory positioning and network design

3 important questions on Network Planning - Inventory positioning and logistics coordination - Integrating inventory positioning and network design

What does focusing on local optimizations, where each facility in the supply chain optimizes its own objective with very little regard to the impact of its decisions on other facilities in the supply chain, yield?

Low inventory turn
Inconsistent service levels across locations and products
The need to expedite shipments, with resulting increased transportation costs

When can we see a pull strategy in a network design?

Demand uncertainty is a critical factor for high-variability-low-volume products and, hence, the supply chain strategy will position inventory at the primary warehouses so as to take advantage of risk pooling.

When can we see a push strategy in a network design?

For low-variability-high-volume products, the focus is on economies of scale in transportation costs and, hence, these products are positioned as close as possible to the customers to reduce transportation costs.