Dynamic design and risk assessment of logistics distribution networks

Proceedings of the 7th International Symposium of Logistics and the 2nd International Symposium on Operations Strategy, Edited by Sadler, I., Power, D. and Dapiran, G.P., 14th-17th July, Melbourne, AUSTRALIA, 437-444.

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Abstract

The structures of supply chains are affected by various factors that change over time. These factors influence the location and number of stockholding locations in a distribution network, the inventory holding costs and the transportation costs. In this paper a systematic approach has been developed to ensure that the future supply chain scenario is robust to the changing operating environment that is used to highlight when it is important to redesign the distribution network. The Taguchi method and simulation was used on case study data from the automotive industry. The generic methodology developed in this paper suggests that for our case study, the capital holding charge for inventory is the most important factor affecting the structure of the distribution network. Thus, if the companies are aligning their capital holding charge with the expectations of the shareholders (or linking it to bank loans) then this needs to be monitored closely in order to judge when the supply chain needs to be redesigned.