Infrastructure Decision Framework
"You need to decide whether to build your own infrastructure or keep paying someone else's fees, what type of distribution network to design, and how to scale it without building too early (Webvan) or too late (losing to competitors who invested first). How do you make infrastructure decisions that match your actual volume and growth trajectory?"
A build-vs-rent decision with ROI calculation, an active/passive infrastructure type selection, a Murray's Law network design (if building), and a staged investment plan that matches infrastructure spending to actual volume thresholds.
When to use this
When 3PL or platform fees exceed $5M annually and you're questioning whether to build in-house. When designing a distribution network from scratch. When scaling requires choosing between active and passive transport modes. When evaluating whether infrastructure is a competitive advantage or a commodity best rented.
The process
Calculate Your Infrastructure Tax
Questions to answer
How to do this
What you'll have when done
- Infrastructure tax inventory: every provider, annual cost, and percentage of revenue
- Tax rate assessment: negligible (<5%), monitoring zone (5-15%), or evaluation threshold (>15%)
- Replicability analysis: which infrastructure could you build vs. which is irreplaceable
- Growth trajectory: are infrastructure costs growing faster or slower than revenue?
Run the Build vs. Rent ROI Calculator
Questions to answer
How to do this
What you'll have when done
- ROI calculation for each infrastructure category: current rental cost, estimated owned cost, payback period
- Build-vs-rent recommendation for each category with confidence level
- Sensitivity analysis: how payback changes if volume drops 20-30%
- Strategic assessment: competitive advantage vs. commodity for each category
Choose Active or Passive Infrastructure
Questions to answer
How to do this
What you'll have when done
- Product characteristic score (0-12) with infrastructure type recommendation
- Active/Passive/Hybrid infrastructure selection with rationale
- Economic validation: transport cost as percentage of product value
- Competitive assessment: does your infrastructure choice match or beat competitors?
Design the Network with Murray's Law
Questions to answer
How to do this
What you'll have when done
- Four-tier network architecture with facility count and capacity at each tier
- Murray's Law validation: does branching ratio minimize total cost?
- Geographic placement map: facility locations matched to customer density
- Network health scorecard: delivery distance, utilization, last-mile cost share, 2-day delivery rate
Stage the Investment
Questions to answer
How to do this
What you'll have when done
- Current stage assessment with evidence
- Stage-appropriate infrastructure plan: what to build now, what to rent, what to plan for
- Volume thresholds for stage transitions: the specific order volumes that trigger next investment
- Transition timeline: when you expect to cross each threshold based on growth trajectory
Monitor Network Health Continuously
Questions to answer
How to do this
What you'll have when done
- Network health dashboard: delivery distance, utilization, last-mile cost, 2-day delivery rate
- Bottleneck alerts: facilities approaching capacity limits
- Expansion candidates: regions where demand has outgrown infrastructure
- Pruning candidates: facilities with consistently low utilization
See it in action: Amazon
Adapt to your context
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