Supply Chain Network Design: Best Practices, Benefits & Implementation (2025)

Remember when supply chains were simple? When you could plan your network once and forget about it for years? Those days are gone. Today, if your supply chain network design still looks like it did in 2020, you're already behind.

Costs are climbing while service levels slip. Networks that worked brilliantly three years ago are now creaking under the weight of nearshoring demands, carbon reporting requirements, and energy price volatility.

And here's the kicker: 73% of companies^[1] are now pursuing dual-sourcing and regionalisation strategies, completely reshaping global trade flows.

So how do you design a network that can handle whatever 2025 throws at it? Let's dig into what supply chain network design is and how it actually works.

What is supply chain network design?

Supply chain network design is your business's circulatory system blueprint. It maps out where to place facilities, how to route products, and which policies to follow - all while juggling cost, service, risk, and increasingly, carbon emissions.

Simply put, it answers the main question: Where should you make, store, and ship your products to maximise profit whilst minimising headaches?

Supply chain leaders must now deliver genuine value to the overall business. It's not enough to optimise logistics costs anymore. Your supply chain optimisation network needs to handle ESG requirements, cope with constant disruptions, and still deliver products faster than ever.

Why network design matters more than ever in 2025

The stakes have never been higher. Uncertain global trade dynamics have accelerated reshoring and nearshoring efforts. Meanwhile, consumer expectations are evolving rapidly, with a growing demand for personalised products and faster delivery times.

Add carbon reporting into the mix, and suddenly your network is proving your environmental credentials too. Scope 3 emissions often represent 84% of a company's total carbon footprint, and guess where most of those emissions come from? Your supply chain network.

3 levels of supply chain network design

Not all network decisions are created equal. Understanding which level you're operating at determines everything from your timeline to your tools.

1. Strategic design (annual/bi-annual)

This is your big-picture thinking. Where should you open that new distribution centre? Should you nearshore production from Asia to Mexico?

These decisions reshape your entire footprint and typically involve:

• Facility location decisions (open, close, relocate)
• Major capacity investments
• Long-term supplier relationships
• Market entry or exit strategies

2. Tactical design (quarterly)

Here's where you fine-tune the machine. You're not moving factories, but you're optimising flows within your existing network:

• Inventory positioning across echelons
• Transportation mode selection
• Seasonal capacity adjustments
• Supplier allocation shifts

3. Operational design (weekly/daily)

The daily grind of making it all work. This includes:

• Warehouse slotting optimisation
• Load building and route planning
• Expedited shipping decisions
• Real-time inventory rebalancing

Your 8-step process for supply chain network optimisation

Ready to redesign your network? Here's a battle-tested approach that actually delivers results:

Step 1: Frame your scenarios

What keeps you up at night? Tariff changes? Carbon taxes? A supplier going bust?

Build scenarios around your biggest risks and opportunities. Don't just plan for growth, plan for shocks too.

Step 2: Build your data model

Garbage in, garbage out. You need solid data on demand patterns, costs, lead times, capacity constraints, and yes, CO₂ emissions.

Current emissions calculations are inflexible and prone to error, rendering them inaccurate, so invest time in getting this right.

Step 3: Run a greenfield analysis

Start with a clean slate. Where would you put facilities if you had no constraints? This baseline shows you the theoretical optimum before reality kicks in.

Step 4: Optimise with constraints

Now add the real world back in. Factor in your existing facilities, capital limitations, and service commitments. Use mathematical optimisation to find the best feasible solution.

Step 5: Stress-test through simulation

Static models lie. Run your design through simulations that capture seasonality, variability, and disruptions. What happens when a port closes? When demand spikes 40%? When fuel costs double?

Step 6: Check your carbon maths

With stricter environmental regulations and consumer demand for responsible sourcing growing, you can't skip this step. Calculate Scope 3 emissions for each scenario and identify reduction opportunities.

Step 7: Build your playbook

A great design without an implementation plan is just expensive consultancy. Create clear governance, set trigger points for changes, and establish review cadences.

Step 8: Monitor and adapt

Your network isn't set-and-forget anymore. Track performance, watch for drift, and be ready to pivot when conditions change.

Core supply chain network design models

Let's demystify the maths. These models sound complex, but they're just tools to answer practical questions:

1. Fixed-charge facility location: Should you open that distribution center in Hyderabad? This model weighs fixed costs against variable savings.
2. P-median problems: Where should you put three warehouses to minimise average delivery distance? Perfect for coverage decisions.
3. Hub-and-spoke design: Instead of shipping direct from every plant to every customer, route through consolidation hubs. Think how airlines operate.
4. Multi-echelon inventory optimisation: Where should safety stock sit - at the factory, DC, or store? This model finds the sweet spot.

Real-life supply chain management examples

Want to see supply chain network design done right? Let's see some real-life supply chain management examples.

Zara's speed obsession

Zara has 12 inventory turns per year compared to 3-4 per year for competitors. How? By keeping production close to markets and maintaining tight control over the entire chain.

Their Spanish hub can get new designs from sketch to store in just two weeks. The lesson? Proximity and control beat cheap labour when speed matters.

P&G's multi-echelon mastery

Procter & Gamble optimised individual warehouses and the entire network as one system. Using multi-echelon tools to manage a majority of P&G's supply chains, they achieved massive working capital savings whilst maintaining service levels.

The key? Looking at inventory holistically rather than location by location.

Unilever's digital transformation

Unilever's AI-powered customer connectivity model runs more than 13 billion computations per day, achieving 98% on-shelf availability with key customers.

They've moved beyond traditional network design to create what they call "One Supply Chain" with their customers. The boundary between Unilever's network and their customers' networks has essentially disappeared.

How GrowthJockey approaches supply chain network design

At GrowthJockey - a full-stack venture builder, we've learned that great network design is about building adaptive capability. Our approach combines rapid design sprints with continuous optimisation.

We start with greenfield analysis to show what's possible, then layer in constraints through MILP (mixed-integer linear programming) models. But here's our twist: we don't stop at the mathematical optimum. Using digital twin technology, we simulate your network under hundreds of scenarios before you commit a single rupee.

Our intellsys.ai platform then monitors network performance in real-time, scoring risks, recommending buffer adjustments, and tracking Scope 3 emissions automatically. Think of it as your network's immune system - constantly watching for threats and opportunities.

FAQs on supply chain network design

Q1. What is the supply chain network?

A supply chain network is the interconnected system of suppliers, manufacturing facilities, warehouses, distribution centres, and transportation routes that work together to produce and deliver products to customers.

Q2. What are the 7 C's of supply chain management?

1. Customer-centricity: Design around customer needs, not internal constraints
2. Connectivity: Integrate systems and partners for seamless information flow
3. Collaboration: Work closely with suppliers and customers as one extended enterprise
4. Customisation: Tailor solutions to specific market and customer requirements
5. Coordination: Synchronise activities across all network nodes
6. Creativity: Innovate continuously to stay ahead of disruptions
7. Control: Monitor performance and maintain governance across the network

Q3. What is network design in SCM?

Network design in SCM strategy is the process of determining the optimal structure, location, and configuration of supply chain facilities and the flows between them.
Q4. What is the primary objective of a supply chain network design?

The primary objective of supply chain network design is to build the most efficient and cost-effective structure for sourcing, production, storage, and distribution while meeting customer service goals.

1. 73% of companies - Link ↑