Supply chain managers should re-think their network design in the time of high fuel prices
Filed in archive Research 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?
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scm supply chain management network design mit fuel cost oil rise distribution 2007 supply+chain
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