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by ehsan 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.
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?
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.
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
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scm
supply
chain
management
network
design
mit
fuel
cost
oil
rise
distribution
2007
supply+chain
Trackback: http://publish.creative-weblogging.com/publish/mt-tb.pl/117834
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Vote for Supply chain managers should re-think their network design in the time of high fuel prices:
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Rating: 8.67 out of 3 vote(s) cast.
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Response from:
Eric
(03/27/08 8:09am)
Response from:
ehsan
(03/28/08 6:43pm)
Hi Eric,
I don't think he has taken those factors into account but thanks for the comment:
Certainly these factors have a cost impact and should be included in the new design considerations.
BTW, do you know about any case studies aailable in this area?
I don't think he has taken those factors into account but thanks for the comment:
Certainly these factors have a cost impact and should be included in the new design considerations.
BTW, do you know about any case studies aailable in this area?
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