You are on page 1of 5

Network Design

Case Study Analysis


1 2 3
G. Harika Reddy, S. V. K. Varshit, P. Madhuvas Reddy
1, 2, 3
Department of Mechanical Engineering, K. L. University
1 2
harika1495@gmail.com, srkvamsi@gmail.com

ABSTRACT: In the present day scenario supply chain costs are determined by
online shopping was increasing rapidly. location of facilities and the flow of
Respectively competition among the product between the facilities. Companies
online retailers was along being rapidly have been led to modify their basic supply
increased. To overcome this competition chain, investing in the tools and resources
and to sustain in the market they have to to develop an improved SCN design.
follow effective network design. In this Designing a SCN involves creating a
study we had considered Amazon one of network that incorporates all the facilities,
the leading online shopping store and means of production, products, and
studied some of the problems regarding transportation assets owned by the
it’s present system and suggested organisation or those not owned by the
possible solutions which improves its organisation but which immediately
network design. We had observed the support the supply chain operations and
present fulfilment centres across India product flow. The design should also
and proposed a better location for include details of the number and location
installing a new fulfilment center. By the of facilities: plants, warehouses, and
end of this project we have successfully supplier base. Therefore, it can be said that
proposed a location for a new fulfilment a SCN design is the combination of nodes
center and cost variation of the product with capability and capacity, connected by
by the proposed system. lanes to help products move between
facilities.
INTRODUCTION
LITERATURE REVIEW
A supply chain network can be
strategically designed in such a way as to Herbert Kotzab, explained briefly about
reduce the cost of the supply chain; it has what is supply chain, how important it is to
been suggested by experts that 80% of the organization, what are the problems
involved in it, key factors responsible for important to observe delivery time taken to
its successful utilization [1]. As the study deliver different products to different
involves calculation of shipping costs and locations based on which optimization
as we had selected railways as transport process need to be carried [6].
medium shipping costs according to
METHODOLOGY
weight of the luggage by Indian railways
was taken into consideration [2].
Establishing a new fulfilment center for an
online store is not an easy task. Several
factors will be included in it, like political
factors, economic factors, number of
orders and type of orders placed near to the
center, type of products placed by the
customer, delivery time, transport charges
etc. By taking into consideration of all
these factors and to establish a new
fulfilment center we need to think about
not only the regular products but some
major or expensive products ordered by
the customer (which may not be available
and have to be shipped from distant areas) It was identified from the present
scenario that across the east coast
effective Transport Management System there are only two Amazon
will be required [3]. By studying TMS and fulfillment centers.
considering the locations for establishment Problems raised with the current
of new fulfilment center is not sufficient strategy:

but we need to optimize the process so that  The delivery time taken for
particular products will be high
customer requirements like delivery time
across the east coastal region.
and shipping costs will be reduced [4]. Therefore responsiveness of the
supply chain is being affected. 
There are 4 modes of transport to deliver 
items from one destination to the other. As  High risk is involved in logistics to
carry specific products such as
we need to optimize the system i.e., reduce fragile materials, electronic goods
delay in delivery time and shipping costs etc. 

involved in it the most economic way to  Accordingly shipping cost incurred
will also be high. 
transport the goods is by railways [5]. It is
 Some products are limited to some major parts i.e., for which there will be
locations only which makes delay less availability and some even might be
in delivery and incurs high
shipping cost as well and makes had to shipped from another country and
inventory management a tough
such products were not shipped directly to
task. 
the customer but will be sent to the nearest
Due to the above mentioned problems
fulfillment center and then to either
establishment of new fulfilment center is
customer or another nearest warehouse and
required and Visakhapatnam was
then to the cutomer. Due to this delivery is
identified as best source.
delayed and cost incurred will be high.
PROPOSED SOLUTION

India is a fastest growing e-market center.


ANALYSIS
Due to this there was heavy competition
among various e-commerce site. To To support the above mentioned solution a
maintain their position in market various small case study was taken into
strategies were being followed by various consideration.
e-stores which will be user friendly to
Consider an order of 100 kg weighed
customer as well as retailers. One of the
products placed in two states i.e. Andhra
main specifications that customer will
Pradesh and Tamil Nadu. In regular
compare between various sites was cost of
process the total order goes to Chennai
the product and delivery time. It also
fulfilment center and the products are
includes quality of the product but it
distributed from there to Hyderabad ware
depends on the manufacturer. Due to this
house.
rapid increase in number of orders across
the country were being increased and the Let us consider there are 100kg weighed
fulfilment centres and warehouses were products being shipped form Delhi to
coming short for the distribution of the Chennai through train.
products. Due to this the supply of
The distance between Delhi to
products are getting delayed. By observing
Chennai is 2175kms and the cost for
the above image we can find the locations
100kgs to transport is 257.80rs/kg then the
of various fulfilment centres in India. If
cost for 100kgs is 100X257.80= Rs25780/-
observed carefully we can find that there
are no Fulfilment centres in the state of In the placed order of 100kgs.,
Andhra Pradesh and Orissa. But for some weight in total there were 35 products of
which 15 (weighing 30 kg) were placed 12632.20+1997.10=Rs14,629.3/-
from Andhra Pradesh, for which they had
By comparing the two networks the
to be shipped back to ware house in
total cost difference is Rs 11,541/-
Hyderabad. The distance between them is
706kms. The cost for 30kg products is Product cost in Andhra Pradesh by
Rs31.02/kg then 30X31.02=Rs930.6/-(For (direct route) will be Rs 133.14/-
convenience we had taken 15 were of
(In Chennai Rs631.61/-)
equal weight and same product).
By observing the shipping costs per item
So the total cost for transportation
in different routes proposed method is
is 7734+930.6=Rs8664.6/- (for 30 kgs.,
most effective. Another advantage by
from Delhi to Chennai calculated cost +
having a new fulfilment center in
From Chennai to Hyderabad cost).
Visakhapatnam is that it has port facility
Therefore shipping cost of each so that we can either ship the products by
product for Andhra Pradesh is Rs 577.64/- either sea route or by rail/road.(All the
(Separate shipping charges will be order placed and the shipping costs will be
included depending on the location from changed over time to time so that cost also
which order was placed). Shipping cost per varies according to the content).
product in Chennai is Rs902.3/-
RESULTS AND CONCLUSIONS

Now, according to our new


In this present study we had explained
network let us see the transportation
about the necessity of an efficient network
charges for 30kg weighed products Delhi
design for an e-commerce organisation,
to Visakhapatnam is Rs66.57/Kg for
explained what is network design by
distance 1763.49kms then the cost is
taking a local organization. By observing
Rs1997.10/-
this process we had taken Amazon, leading
Transportation cost from Delhi to online store into consideration and studied
Chennai is Rs180.46/Kg for distance of the principles followed by them.
2175kms. There are 70kgs weighed Identifying the problem in the existing
products shipped then the cost for method we had suggested the possible
transportation is solutions both in customer and retailer
point of view. As there were no fulfilment
Rs12, 632.20/-.The total amount for the
centers along east coast region, there is a
new network is
problem in delivering items to those areas
especially in Andhra Pradesh. In this study [4] Hui Tan “Design of E-Commerce
we had proposed a location to establish a
new fulfilment center in Andhra Pradesh
Platform Based on Supply Chain
so that shipping costs will be decreased
Management” volume 86 of series
and easy to transport, reduces delivery
Communications in Computer and
time. We had taken taken a case study by
Information Science pp 494-50
which present transportation is being taken
place and hypothetically considering [5] Supply chain 24X7 (Through
transportation charges shown the Net).
difference between both networks.
[6] Amazon online site (Through
Although values taken will be changed
Net).
day to day it will be effective by following
proposed method. [7] Network Design (Through Net).

REFERENCES [8] Optimization through efficient


Network Design (Through Net).
[1] Herbert Kotzab, Philip B. Schary
“Managing the Global Supply chain”. [9] Value of Supply Chain Network
(Through Net).
[2] Indian Railways Goods
transportation costs (Through Net)

[3] Supply Chain Digest (Through


Net)

You might also like