Logistics Network Design Of The Retail Global Supply Chain Optimization

With the booming of multi-national company, economy globalization is greatly developed in recent years Global Sourcing, is one of the commercial activities newly occurred with this trend. Retail companies featured as low margin mass volume, have abandoned traditional business model and accepted global sourcing as its strategic tool. Ironically, comparing to its cost saving purpose, the biggest problem with supply chain network expansion is the increase of cost. It is due to the gap between the theory of logistics network design and practical operation.This essay focuses on logistics network design. First it states retail industry's rapid progress and points out global sourcing is used for seeking products with higher quality and lower price. With such change, retailers turn their roles in supply chain from follower to leader.Then, basic definition and concepts are introduced. With the explanation how network design affects the overall supply chain structure, the essay claims that logistics network design has the first and basic impact on supply chain cost.Moreover, the essay described the model of logistics network design for retail companies. It highlights no matter what kind of network is finally chosen, centralized / decentralized / combined, we should always focus on three key questions in designing stage.Finally, logistics network design in Asia Pacific for the multi-national furniture retail company, IKEA, is taken as case study. With analyzing and simulation, the essay proves that with the combination of centralized network and decentralized network, mapping to high flow and low flow articles, we could achieve overall supply chain optimization for the company.