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Supply chain managers should re-think their network design in the time of high fuel prices

Filed in archive Research on March 25, 2008

As the fuel prices are rising, supply chain managers should re-think the design of their Supply chain network. That is what Dr. Simchi Levi of MIT says based on his simulation experience.

In a recent article by SC Digest, Dr. Simchi Levi mentioned that every $10 increase in oil prices leads to 4 cent per mile increase in transportation rates. This can act as a heavy force for change in the current designs of the firms' supply chain network.

Fuel-price-scm-design.jpg



As you can see in the above photo which is a snapshot from a simulation, as the oil prices increase, supply chain network design shifts to more distribution centers dispersed in different geographical parts of the market.

Has your company started such initiative recently?


Permalink: Supply chain managers should re-think their network design in the time of high fuel prices

Tags: scm  supply  chain  management  network  design  mit  fuel  cost  oil  rise  distribution  2007  supply+chain 

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