Why Does Geography Matter in Supply Chain?

Why Does Geography Matter in Supply Chain?

It should be clear by now that the supply chain network design problem is just as much about geography as it is about business strategy. The two cannot be separated.

Take these supply chain considerations for example:

• If you have a plant in the interior of China and some of your customers are in New York, you need to physically get the product out of China, across the ocean, and to New York. 

• If you make wood products (like paper or boards), you can locate plants either close to the raw materials (forest areas) or close to your customers (usually located a significant distance away from the large forest areas). 

As the examples highlight, decisions about the location of your facilities impact many aspects of your business and require you to make trade-offs. Specifically geography drives the following:

• Transportation Cost
• Service Level
• Risk
• Local Labor, Skills, Materials, and Utilities
• Taxes
• Carbon Emissions

Written By 

Gazi Sanaul Hasan