Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

3.4 Summary

A make decision requires subsequent planning of facility locations. Features for the design of rather centralized or decentralized production networks are value density, customer proximity, customer tolerance time, markets requiring specific products, volatility of demand, the supply chain’s vulnerability to disruptions, and economies of scale and scope. Features for the design of distribution and service networks are volume, volatility, and variety of demand, customer tolerance time, value density (in the case of service networks, the value density of the service), and the customer pickup tolerance (in the case of service networks, the customer bring and pickup tolerance). For the selection of new locations, the chapter introduces seven possible location factors (three of these for the selection of joint venture partners) with 5 to 10 criteria per factor and a procedure for systematic reduction of possible locations. Locations for distribution and service networks are selected according to the degree of customer contact. If only indirect contact, or even no contact at all, with customers is necessary (as is the case, for example, with “back offices”), the location criteria are basically the same as those for production locations. For selection of new locations, factor rating is frequently used. For location configuration, that is, for assigning products or services to an existing location, linear programming can be used.

The triple-bottom-line concept is based on the three pillars of sustainability — namely, eco­nomy, society, and environment, which interact with companies. Energy-intensive compan­ies especially are increasingly concerned with improving their energy efficiency. This leads to energy management proper. As a solution for this, industrial symbiosis is discussed.


Course sections and their intended learning outcomes

  • Course 3 – Supply Chain Design: Location Planning and Sustainability

    Intended learning outcomes: Produce design options for global production, distribution, service, and transportation networks. Describe location selection / configuration for a production network using qualitative / quantitative methods. Explain the concept of sustainability with reference to the triple bottom line. Disclose economic opportunities for social and environmental commitment as well as energy management concepts.

  • 3.1 Design Options for Integrated Production, Distribution, Service, and Transportation Networks

    Intended learning outcomes: Explain design options for global production networks, distribution networks, service networks, and transportation networks. Describe the network structure for decentralized distribution, and design options for retail networks. Disclose the integration of the portfolios.

  • 3.2 Location Selection and Location Configuration

    Intended learning outcomes: Differentiate between location selection and location configuration. Explain location selection using qualitative methods and factor rating. Describe location selection and location configuration with linear programming.

  • 3.3 Sustainable Supply Chains

    Intended learning outcomes: Explain the changing concept of sustainability with reference to the triple bottom line. Disclose economic opportunities for social commitment and for environmental commitment. Describe energy management concepts and measures for improved environmental performance. Produce an overview on the measurement of the environmental performance. Present social and environmental dimensions in industrial practice.

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