HOW CENTRALIZATION AND DECENTRALIZATION OF IMPACT SUPPLY CHAIN REDESIGN
A supply chain redesign has a significant impact on the inventory and supply chain costs. This can be done only by a rigorous cost benefit analysis The centralization and decentralization example also illustrates the benefit of Risk Pooling.
For example a company has 10 regional stock points which it serves its dealers from the stock point that is the closest and wants to centralize its stock holding, which means that the stocks will be held at one point and the retailers would be served from there.
However this arrangement, will increase the transportation costs along with the fact that it cannot force the retailers to hold excess inventory. This means that the company has to work on a much faster transportation and logistics scheme.However this will increase its logistics costs.
Whereas in the decentralization model, the transport costs will be low, but the cost of holding inventory at the companies warehouse will be high.
Thus its essential to do a rigorous and effective costs analysis by “ using a preductive software to estimate demand and supply chain redesign In general whenever we pool demand across locations , the phenomenon of rik pooling may be observed. Risk pooling suggests that demand uncertainity is reduced when one pools demands are spread across location
A supply chain redesign has a significant impact on the inventory and supply chain costs. This can be done only by a rigorous cost benefit analysis The centralization and decentralization example also illustrates the benefit of Risk Pooling.
For example a company has 10 regional stock points which it serves its dealers from the stock point that is the closest and wants to centralize its stock holding, which means that the stocks will be held at one point and the retailers would be served from there.
However this arrangement, will increase the transportation costs along with the fact that it cannot force the retailers to hold excess inventory. This means that the company has to work on a much faster transportation and logistics scheme.However this will increase its logistics costs.
Whereas in the decentralization model, the transport costs will be low, but the cost of holding inventory at the companies warehouse will be high.
Thus its essential to do a rigorous and effective costs analysis by “ using a preductive software to estimate demand and supply chain redesign In general whenever we pool demand across locations , the phenomenon of rik pooling may be observed. Risk pooling suggests that demand uncertainity is reduced when one pools demands are spread across location
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