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Abstract
Supply Chain Management (SCM) is a very important part of creating and maintaining a successful business. SCM is the process of planning and controlling all operations of the supply chain as efficiently as possible. Strategic activities can include: network optimization; partnerships with suppliers, distributors, and customers; product design coordination; IT infrastructure; and aligning organizational strategy with supply strategy. Most of the time, companies are not starting from scratch because it started as a small company that is gradually expanding and they need to know where to place their next facility. In this case, there are several models that can be used to aid this determination. These models take into account the factors that the company is interested in meeting customer demand while minimizing costs. Demand is self-explanatory, while costs can include anything from inventory cost to fuel and transportation costs. This paper analyzes the placement of distribution centers of an existing company using the Center of Gravity method. This model simplifies everything and uses the current locations and demands to come up with a location for each distribution center. The results produced from the model are compared to the actual locations and the differences are presented, discussed, and justified.
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1. Introduction
Supply Chain Management (SCM) is a process in which all operations of the supply chain are planned and controlled as efficiently as possible. There are many SCM models that exist in order to help understand what is required to move materials across functional and organizational boundaries. Some examples of these models include the SCOR (Supply Chain Operations Research) model, which is promoted by the Supply Chain Management Council and the SCM model, which is promoted by the Global Supply Chain Forum. These models both take a look at the entire supply chain to include areas such as strategic activities, tactical activities, and operational activities. Although very successful companies tend to fare well in all of these categories, the focus tends to fall into strategic activities since they are the most visible.
Strategic activities can include the following:
* Network optimization
* Number of warehouses, distribution centers, and facilities
* Location of warehouses, distribution centers, and facilities
* Partnerships with suppliers, distributors, and customers
* Product design coordination