- Network Design
There has been a significant increase of interest in supply chain resiliency since the onset of COVID-19 as multiple supply chain disruptions have affected companies across the globe. By increasing resiliency, companies aim to increase their ability to adapt to changes occurring throughout their supply chain network. The 3PL company, Coyote Logistics sponsoring this capstone, is trying to increase their customers’ supply chain resiliency through supply chain network design with a focus on transportation costs. Two Coyote customers from different industries were selected as case studies for this project, one from the retail big box industry and one from the packaging industry. An optimization model was implemented to investigate the effect of supply chain resiliency and network design on transportation costs by iterating the model over various demand and resilience threshold scenarios. The analysis across various scenarios revealed that a more resilient supply chain network only minimally increases transportation costs. For example, a 50% resilient supply chain network only resulted in a 3% increase in transportation cost for one customer. Whereas the other customer’s supply chain network though equally resilient in some scenarios was not sufficient to meet certain levels of demand in others, highlighting the importance of facility capacity in resilient supply chain network design. Therefore, it is critical to understand facility capacity relative to demand locations when designing a resilient a supply chain network. For example, facilities should be spread out geographically and the facilities should be sharing the customer demand fulfillment responsibilities equally. This project underlines Coyote’s work with their customers to increase their ability to respond to disruptions in the supply chain and design a more resilient network for the future. In further studies, more capacity information specific to distribution and manufacturing facilities as well as a multi-stop fulfillment strategy should be considered.