Skip to content
Opt Dir

Glossary ยท approach

Network Design

Designing the physical and flow structure of a supply or distribution network at the strategic level โ€” a long-term investment decision.

Supply Chain Network DesignDistribution Network Design
Network design is the strategic-level problem of laying out the physical and flow structure of a supply chain or distribution network. Decision dimensions: how many facilities, in which locations, at what size, what flows from which facility to which customer, which transport mode to use. Facility location is a sub-problem of network design; network design additionally includes flows, the number of echelons (factory โ†’ central warehouse โ†’ regional warehouse โ†’ store), and transport mode. The investment shapes operations for 5โ€“15 years; a bad design is expensive to undo. Modern problems extend to stochastic demand, multi-objective (cost + service + carbon), omni-channel retail, and regulation/tax structures.
ร–rnek

An e-commerce operator plans, over 5 years, to move from a single-center distribution (Istanbul) to a three-region structure (Istanbul + Izmir + Ankara). Each region has a different share of customers, transport cost, service time; the flows between carriers and warehouses will also change. That whole decision is 'network design'.

Where this term appears

Esc Close