Supply Chain Strategy and Network Design
Domain 1 tests whether you can link competitive strategy to supply chain structure and defend network choices with cost-to-serve and service logic.
Strategy before structure
Fisher's framework separates functional products (stable, low-margin) from innovative products (volatile, high-margin). Functional products usually fit an efficient supply chain; innovative products need a responsive one. Place the push-pull boundary where demand becomes predictable: make-to-stock before it, configure-to-order or postponement after it. Segment customers by service needs and profitability, not by channel label.
Network design rules
Use total landed cost for facility and flow decisions: inbound freight, outbound freight, inventory carrying cost, duties and taxes, handling, and service penalties. Center-of-gravity analysis gives a transport-weighted starting location, but capacity, labor, and service constraints can override it. SCOR's Plan-Source-Make-Deliver-Return-Enable structure helps map processes and avoid silo design.
Worked example
A retailer has 60% of demand at A and 40% at B, 300 km apart. On a line, the transport-weighted center is 0.6×0 + 0.4×300 = 120 km from A, suggesting a DC nearer A. But if B needs next-day service while A accepts two days, the service constraint may justify a second DC or a faster lane to B. Reason in two steps: calculate the weighted location, then test whether service, capacity, and inventory costs change the answer.
Traps that cost marks
Assuming one supply chain fits every SKU; optimizing freight rate instead of total landed cost; applying a uniform service level; confusing the push-pull boundary with inventory ownership.