Designing a Successful Logistics Network

Designing a successful logistics network can be a complex and daunting task. Getting a handle on the design in the beginning is imperative in order to control costs. "Some experts suggest that 80% of the costs of the supply chain are locked in with the location of the facilities and the determination of optimal flows of product between them (Michael Watson, 2012)." The supply chain is made up of four pillars. These pillars are the raw supplies, manufacturing plant, warehouse, retail store and/or customers (Simchi-Levi, 2008). The logistics design is the foundation that supports the supply chain and ensures that each pillar is stable, well connected and is able to withstand uncertainties throughout the chain. I will be designing a lean and efficient logistics network consisting of only one warehouse. My company, "Your Nuts!" is selling low cost, high consumable parts, such as nuts, bolts and washers to the Army. The strategic concept of "Your Nuts!" is to supply the eastern seaboard Army Posts with nuts and bolts. Having one warehouse located in New York will be able to support Army units at Fort Drum in NY, Fort Dix in NJ, Fort Bragg in NC, Fort Jackson in SC, Fort Eustis and Fort Lee in VA. Ensuring each pillar has been properly vetted and accurate data has been collected will help streamline the logistics network.

The first pillar in the network is raw supplies. Raw supplies are incredibly important. A company must ensure that it has all the raw materials available in order to produce an end product to scale to support the demand from the customer base. My company will require raw materials such as aluminum, steel, and copper. Outsourcing will be the course of action to obtain the raw materials. After obtaining the raw materials manufacturing must be addressed.

The second pillar, manufacturing, will be contracted out to Mil-Spec Fasteners Corporation. This company currently has all the raw materials and the manufacturing capabilities to support our Warehouse stockage levels and our retail demands (Mil-Spec, 2013). This company has the resources and experience to produce military specification hardware at a low cost. Mil-Spec Fasteners is located in Maryland within close proximity to our distribution warehouse. Having the manufacturer, Mil-Spec, relatively close to the distribution center will reduce the cost of transportation from manufacturer to the warehouse.

The third pillar is the warehouse. The warehouse is heart of the logistics network. The inventory management contained within the warehouse drastically effects the turnaround time for the customers receiving their purchase orders. One main area that is continually addressed is the amount of inventory to have on hand. According to Mal Walker from the Logistics Bureau, 2.4-16 percent of my income should be dedicated to inventory (Walker, 2013). If the warehouse does not have the stock on hand, the competition will be more than happy to provide the order to the customer. I have collected the data from the Army Posts and determined how