OVERVIEW

Purpose

NETWORK* is a computer software program to assist analysts and managers in planning, auditing, and budgeting a firm’s supply channel.  Facility location is a popular application.  NETWORK is a powerful, accurate program that deals with a firm’s most challenging long- and short-term logistics network planning problems.  Yet, it is designed to be user-friendly and to have desktop availability so that the supply chain manager, not the technical specialist, will consult it routinely for fast decision support. 

Scope

NETWORK evaluates large, multi-product supply/distribution networks that encompass product flows from source points (vendors/plants/ports) through multiple levels of intermediate facilities (warehouses, pool points, consolidation points, etc.) and on to customers (retail stores, other plants, end users, etc.).  It will search for the most economical (or profitable) combination of facilities from a selected list, subject to upper and lower limits on throughput and customer service requirements; it will simulate (cost-out) alternative network configurations that the user specifies; and/or it will evaluate selected combinations of facilities (selective evaluation) that will optimize costs or profit contribution.  It can do this in just a few minutes of computer time for each product.  When a NETWORK run is finished, a detailed line-report is available and NETWORK displays the resulting network design on a map and graphically summarizes costs/profits and customer service statistics in the form of pie and bar charts.

      NETWORK accepts data that are readily available from normal supply chain operations.  No special, expensive data sources need to be used.  NETWORK includes a number of tools that assist in converting collected data into information needed by NETWORK.  External spreadsheet software may also be used to help in data preparation.

      NETWORK can be used to answer a number of planning questions such as:

·   What is the best number, size, and location of the facilities in the network that are intermediate to sourcing points and customers, including warehouses, cross-dock facilities, pool points, terminals, stocking points, distribution centers, refurbishing facilities, ports, and manufacturing points?

·   What size and where should the plants/vendors/ports be located?  How should the throughput of the intermediate facilities be assigned to them? 

·   How should the network be modified when transportation, inventory, and costs associated with intermediate facilities change or sales patterns shift?

·   How should the network be modified if inventory stocking policies or customer service standards change?

·   How should the network be designed if location affects product prices and revenues?

·   How large should the budget be for supply chain operations after projecting next year’s costs and sales patterns?

·   How should distribution patterns be adjusted when there are short-term shifts in facility capacity?

·   What network should be chosen in the event of fire, strike, lease expiration, or transport rate change?

Developmental history

The initial version of NETWORK was developed as a mainframe program in 1968.  Since that time, it has evolved through eight versions, migrating from a mainframe environment to the personal computer platform.  The current version incorporates the benefits of Microsoft’s WINDOWS 98, 2000, NT, or XP to provide a user-friendly interface. Continuous improvements have been made in the problem scope, computational speed, and solution quality.  Problems with thousands of customers, hundreds of facilities, and numerous product families can be solved in minutes.  In a word, NETWORK is always undergoing continuous improvement.

THE STRATEGIC PLANNING PROBLEM

Today’s competitive pressures increase the significance of logistics in many manufacturing and service organizations.  Considering the impact of global markets, quick-response logistics, integrated supply chain management, total quality management, and increased customer service expectations, supply chain managers frequently need to re-examine the fundamentals of how products and services are supplied to their customers.

     Network design can be a complex problem of evaluating alternative configurations involving numerous products, multiple facility echelons, many sourcing and warehousing points, and scores of customer locations. 

     The fundamental business problem in logistics network design is straightforward:  How can a company make a profit by meeting or exceeding customer service goals while reducing costs?  The answer to this question is not always simple and requires addressing many of the following questions:

ü How many facilities should be in the network?  Where should they be located?  How large should they be?

ü How many tiers, or echelons, of facilities should be used?

ü Which products (or services) should be available at each location?

ü How should customer demand be assigned to the facilities in the network?

ü What is the relationship between a customer level and the cost to provide it?

ü What transportation service and what inventory policy should be used?

ü What is the landed cost (or profit) of a product delivered to a specific customer location?  Are product prices correct?

     Since major investments often must be made to implement logistics network changes, a proven method is useful to evaluate alternatives and select an optimal strategy.

     NETWORK is a PC-based modeling tool designed to handle the most challenging network planning problems.  It balances transportation, facility, and inventory costs with customer service requirements and capacity constraints to determine the optimal network configuration.

     With NETWORK, a logistics manager can assess the impact of potential changes before major investments are made.  It is easy to operate and computes quickly.  NETWORK has been used successfully for more than 30 years to solve the location problems for many leading companies worldwide.  A partial list of such companies is shown below.

     Now, view NETWORK’s capabilities and benefits through the following slide show.  If you need further information, contact:

Dr. Ronald H. Ballou

Weatherhead School of Management

Case Western Reserve University

Cleveland, OH  44106  USA

Tel: 216/368-3808  Fax: 216/368-6250

E-mail: Ronald.Ballou@CASE.edu

A PARTIAL LIST OF PREVIOUS AND CURRENT NETWORK USERS