Supply Chain Network Design for Small- to Mid-Sized vs. Large Scale Producers

The success of any business, small or large, depends on a number of factors, but for producers of products, few are more important than the strength and resilience of their supply chain networks.

However, the supply chain needs of small-, medium-, and large-scale producers will vary to a high degree and understanding which are the most appropriate supply chain network design philosophies for the size of your business is a key factor in ensuring the steady flow of raw material into your operation and of finished products out the other side.

The Scale of the Challenge

Network design within the supply chain setting serves to satisfy the strategic objectives of the company through the definition of those objectives, the scope of the business, determining which technologies are to be applied and how data will be managed, and the ongoing flow of the supply chain after the implementation step.

Supply chain network design is influenced by a number of factors, including locations and distance between the various links in the chain, current and future demand, service requirements, size and frequency of shipments, warehousing and labour costs, and transportation modes and costs.

Small and Medium vs. Large Scale

When designing a new supply chain network, a small to medium sized producer will consider factors such as frequency of shipments perhaps more so than a large-scale competitor.

Due to restrictions on warehouse space and budget placing limits on how much stock a small to medium sized producer can hold, the need for more regular and reliable resupplies is likely to be more important to a business of that size. They are also likely to place a higher value on relationships with more proximate local suppliers as they will help them build networks within their communities for the enrichment of all involved.

However, a large producer will be able to leverage greater amounts of buying power and have the resources to devote more of its facility footprint to warehousing which will likely result in these kinds of businesses putting more of an emphasis on cost and taking advantage of farther flung suppliers and global supply chains to access the best prices for incoming materials.

Similarly, when it comes to goods leaving a producer, large scale operations will have the resources to get the best deals on transportation and more varied modes of freight transport such as air, which will reduce delivery times and keep a steadier flow of product moving from manufacturing facilities to customers.

Final Thoughts

Creating efficient and robust supply chain networks is at the core of effective production and those brands which best grasp the most appropriate way to construct them – based on their relative scale and place within their market -are the ones most likely to thrive – both through crises such as COVID-19, and during less challenging periods.