Supply Chain

Traditionally supply chain management has meant factories, assembly lines, warehouses, transportation vehicles, and time sheets. Modern supply chain management is a highly complex, multidimensional problem set with virtually endless number of variables for optimization. An Internet enabled supply chain may have just-in-time delivery, precise inventory visibility, and up-to-the-minute distribution-tracking capabilities. Technology advances have enabled supply chains to become strategic weapons that can help avoid disasters, lower costs, and make money. From internal enterprise processes to external business transactions with suppliers, transporters, channels and end-users marks the wide range of challenges researchers have to handle. The aim of this book is at revealing and illustrating this diversity in terms of scientific and theoretical fundamentals, prevailing concepts as well as current practical applications

Optimizing production and inventory decisions at all-you-care-to-eat facilities

Food service, feeding people outside of their home, is one of the largest industries in the world (Hartel and Klawitter, 2008). Restaurants, hospitals, military services, schools and universities are among those organizations providing these services. Management of a food service system requires operations management skill to operate successfully. A key element of food service is food production. Forecasting, demand, managing inventory and preparing menu items are key tasks in the food production process. In this research a series of three studies are presented to improve the food production system policies at an all you care to eat (AYCTE) facility. The first study examines two objectives, limiting its focus to foods for which all overproduction must be discarded (that is, leftovers cannot be saved and used in future periods). The first objective of this research is to present a novel method for estimating shortfall cost in a setting with no marginal revenue per satisfied unit of demand. Our methodology for estimating shortfall cost obtains results that are consistent with CDS management's stated aversion to shortfall, we estimate shortfall values are between 1.6 and 2.7 times larger than the procurement cost and between 30 and over 100 times larger than disposal costs. The second objective is to identify how optimal food production policies at an AYCTE facility would change were life cycle cost estimates of embodied greenhouse gas (GHG) emissions, including carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O), included in the disposal costs associated with overproduction. We found that optimal production levels are decreased significantly (18-25 percent) for food items with high environmental impacts (such as beef), and reduced less for foods with less embodied CO2. The second study considers a broader set of food types, including both foods that cannot be saved and stored as leftovers (as in the first study), and also foods for which overproduction can potentially be saved and served in the future as leftovers. Food service operations in an AYCTE environment need to consider two conflicting objectives: a desire to reduce overproduction food waste (and its corresponding environmental impacts), and an aversion to shortfalls. Similar to the first study, a challenge in analyzing such buffetstyle operations is the absence of any lost marginal revenue associated with lost sales that can be used to measure the shortfall cost, complicating any attempt to determine a minimum-cost solution. This research presents optimal production adjustments relative to demand forecasts, demand thresholds for utilization of leftovers, and percentages of demand to be satisfied by leftovers, considering two alternative metrics for overproduction waste: mass; and GHG emissions. A statistical analysis of the changes in decision variable values across each of the efficient frontiers can then be performed to identify the key variables that could be modified to reduce the amount of wasted food at minimal increase in shortfalls. The last study's aim is to minimize overproduction and unmet demand under the situation where demand is unknown. It also addresses correlations across demands for certain item (e.g., hamburgers are often demanded with french fries). As in the second study, we again utilize a Hooke-Jeeves optimization method to solve this production planning problem. In order to model a more realistic representation of this problem, demand uncertainty is incorporated in this study's optimization model, using a kernel density estimation approach. We illustrate our approach in all three studies with an application to empirical data from Campus Dining Services operations at the University of Missouri

Firm Performance Impacts of Digitally Enabled Supply Chain Integration Capabilities

Best practice exemplars suggest that digital platforms play a critical role in managing supply chain activities and partnerships that generate performance gains for firms. However, there is limited academic investigation on how and why information technology can create performance gains for firms in a supply chain management (SCM) context. Grant’s (1996) theoretical notion of higher-order capabilities and a hierarchy of capabilities has been used in recent information systems research by Barua et al. (2004), Sambamurthy et al. (2003), and Mithas et al. (2004) to reframe the conversation from the direct performance impacts of IT resources and investments to how and why IT shapes higher-order process capabilities that create performance gains for firms. We draw on the emerging IT-enabled organizational capabilities perspective to suggest that firms that develop IT infrastructure integration for SCM and leverage it to create a higher-order supply chain integration capability generate significant and sustainable performance gains. A research model is developed to investigate the hierarchy of IT-related capabilities and their impact on firm performance. Data were collected from 110 supply chain and logistics managers in manufacturing and retail organizations. Our results suggest that integrated IT infrastructures enable firms to develop the higher-order capability of supply chain process integration. This capability enables firms to unbundle information flows from physical flows, and to share information with their supply chain partners to create information-based approaches for superior demand planning, for the staging and movement of physical products, and for streamlining voluminous and complex financial work processes. Furthermore, IT-enabled supply chain integration capability results in significant and sustained firm performance gains, especially in operational excellence and revenue growth. Managerial initiatives should be directed at developing an integrated IT infrastructure and leveraging it to create process capabilities for the integration of resource flows between a firm and its supply chain partners

Electronic supply chain management systems in managing the bullwhip effect on selected fast moving consumer goods.

Ph. D. University of KwaZulu-Natal, Durban 2014.The amplitude in order variability as orders surge upstream a supply chain epitomises a phenomenon commonly called the bullwhip effect. The real consumer demand orders are comparatively and tentatively evinced less variability while trading supply chain members on the midstream and upstream stages experience the amplified order vacillations. The oscillator effect reveals a number of pernicious problems throughout the supply chain networks, as downstream sites include harmful bloated inventory and shortages with poor customer service, and the midstream and upstream sites depict the disharmonic capacity on improper planning and inconsistent scheduling in production. This study investigates the selected fast moving consumer goods (FMCG) industry on the amplified consumer demand order variability as orders cascade from downstream (retailers) to the midstream as well as upstream sites of the supply chain network.The effect of electronically-enabled supply chain management (e-SCM) systems remains the central hypothesis for instant information sharing on inventory positioning, integrated supply chain management processes and improved profitability through positive performance targets and outcomes across supply chain trading partners. The main objective aims to understand the on extent of the relationship to which the phenomenon of bullwhip effect can be explained by e-SCM system diffusion, optimal inventory positioning, strategic information sharing and global optimisation strategies. These seamless linkages between supply chain partners seem to entrench velocity on quasi-real-time information flow in consumer demand and supply sides, inventory status and availability, and capacity availability. This study found empirical research evidence on e-SCM systems that retail supply chain businesses have fastidiously adapted to technology clockspeed for the last five years. The majority of the respondents (92%) for both upstream and downstream echelon categories agreed that e-SCM systems have a significant role to play in mitigating the consumer demand order variability in the supply chain network. This study further discovered that the migration from in-house IT systems to integrated e-SCM systems (65%) would entrench close integration of information exchange and processes across different parts of the organisation and inter-organisational linkages. The e-SCM systems diffusion also depicted a positive linear relationship to the extent to which the organisations efficiently and timeously communicate the future strategic needs and demand order replenishments throughout the entire supply chain network. However, the access to advance economic information negatively related to e-SCM systems with the virtue of legal constraints and template-based information attachments

Essays in Measuring, Controlling, and Coordinating Supply Chain Inventory and Transportation Operations

Supply chain collaboration programs, such as continuous replenishment program (CRP), is among the most popular supply chain management practices. CRP is an arrangement between two partners in a supply chain to share information on a regular basis for lowering logistics costs while maintaining or increasing service levels. CRP shifts the replenishment responsibility to the upstream partner to avoid the bullwhip effect across the supply chain. This dissertation aims to quantify, measure, and expand the benefits of CRP for the purpose of reducing logistics cost and improving customer service. The developed models in this dissertation are all applied in different case studies supported by a group of major healthcare partners. The first research contribution, discussed in chapter 2, is a comprehensive data-driven cost approximation model that quantifies the benefits of CRP for both partners under three cost components of inventory holding, transportation and ordering processing without imposing assumptions that normally do not hold in practice. The second contribution, discussed in chapter 3, is development of a verifiable efficiency measurement system to ensure the benefits of CRP for all partners. Multi-functional efficiency metrics are designed to capture the trade-off in gaining efficiency between multiple functions of logistics (i.e. inventory efficiency, transportation efficiency, and order processing efficiency). In addition, a statistical process control (SPC) system is developed to monitor the metrics over time. We discuss suitable SPC systems for various time series behaviors of the metrics. The third contribution of the dissertation, discussed in chapter 4, is development of a multi-objective decision analysis (MODA) model for multi-stop truckload (MSTL) planning. MSTL is becoming increasing popular among shippers while is experiencing significant resistance from carriers. MSTL is capable of reducing the shipping cost of shippers substantially but it can also disrupt carriers’ operations. A MODA model is developed for this problem to incorporate the key decision criteria of both sides for identifying the most desirable multi-stop routes from the perspective both decision makers

Generalized models and benchmarks for channel coordination

This dissertation takes into account the latest industrial trends in integrated logistical management and focuses on recent supply chain initiatives enabling the coordination of supply chain entities. The specific initiatives of interest rely on carefully designed transportation and supply contracts such as Vendor Managed Inventory applications. With such new initiatives, substantial savings are realizable by carefully coordinating the operational decisions, such as procurement, transportation, inventory, and production decisions, for different cooperating entities in the supply chain. The impact is particularly tangible when coordinated policies address channel coordination issues between these entities. This dissertation first provides a critical review and comparative analysis of the literature on buyer-vendor coordination problems. Recognizing a need for analytical research in the field, the dissertation then develops and solves centralized and decentralized models for complex buyer-vendor coordination problems with applications in supply/replenishment and transportation/delivery contract design. The two specific classes of problems considered include i) buyer-vendor coordination under generalized replenishment costs, and ii) buyer-vendor coordination under depreciating economic value of items. Under these considerations, the dissertation also develops efficient coordination algorithms and new mechanisms for effective channel coordination

Dynamic mutual adjustment search for supply chain operations planning coordination

RÉSUMÉ Les chaînes d’approvisionnement sont des systèmes complexes comprenant plusieurs organisations indépendantes avec des objectifs différents dans un environnement incertain et dynamique. Une question clé dans la gestion de chaîne d’approvisionnement (Supply Chain Management) est la coordination des décisions de planification des opérations. Les systèmes de planification de chaîne d’approvisionnement introduits dans la littérature peuvent être classés en deux systèmes de planification principaux: les systèmes de planification centralisés et les systèmes de planification décentralisés. Les systèmes centralisés peuvent théoriquement optimiser les performances de la chaîne d’approvisionnement bien que leur mise en œuvre nécessite un haut degré d’échange d’informations entre les partenaires de la chaîne d’approvisionnement. Cela conduit à des difficultés lorsque des partenaires indépendants ne veulent pas partager l’information. Afin de répondre à ces difficultés, les systèmes décentralisés de planification des opérations sont conçus dans lesquels chaque membre est une entité économique distincte qui prend ses décisions opérationnelles de manière indépendante, mais avec un niveau minimal d’échange d’information. Dans cette thèse, nous étudions dans un premier temps les méthodes de coordination des processus de planification des opérations dans les chaînes d’approvisionnement proposées dans la littérature. Ensuite, nous proposons un cadre de classification de ces méthodes basée sur la technologie mise en œuvre, et identifions des opportunités de recherches. Dans un deuxième temps, nous proposons une approche de coordination décentralisée qui consiste en un ajustement mutuel des décisions de planification basé sur la programmation mathématique et l’échange d’incitatifs financiers. Ce mécanisme, contrairement à un système centralisé traditionnel, implique deux entreprises, qui interagissent l’une avec l’autre afin d’améliorer leur performance. Dans le cadre de cette approche, seul un petit sous ensemble des solutions de coordination sont considérées, et l’expérimentation montre que cette approche de coordination a un potentiel d’amélioration du profit global tout en préservant l’équité en termes de partage des bénéfices de l’amélioration. Enfin, afin de proposer une méthode de coordination capable d’être utilisable dans le contexte dynamique des chaînes d’approvisionnement, cette thèse propose dans un premier temps une stratégie performante de négociation du fournisseur adaptée à l’approche de coordination proposée, ainsi qu’une stratégie de partage des revenus appliquée à un contexte d’horizon roulant. L’analyse de la performance de cette méthode particulière montre également que l’approche proposée produit une stratégie gagnante-gagnante pour les deux partenaires de la chaîne d’approvisionnement et améliore les résultats de planification.----------ABSTRACT Supply chains are complex systems, which include several independent organizations with different objectives, in dynamic uncertain environment. A key issue in supply chain management (SCM) is the coordination of supply chain operations planning decisions. Supply chain planning systems introduced in the literature can be classified into two main planning systems: centralized and decentralized planning systems. Centralized systems can theoretically optimize supply chain performance although its implementation requires a high degree of information exchange among supply chain partners. This leads to difficulties when independent partners do not want to share information. In order to address these difficulties, decentralized systems are designed for supply chains where each member is a separate economic entity that makes its operational decisions independently, yet with some minimal level of information sharing. In this thesis, we first review supply chain operations planning coordination methods from centralized to decentralized approaches proposed in the literature. Next, we propose a classification scheme of these approaches based on the technology used by the authors. Finally, we identify research opportunities. Second, we propose a decentralized operations planning coordination mechanism referred to as mutual adjustment search (MAS), which is based on a negotiation-like mutual adjustment of planning decisions with financial incentives and rooted in mathematical programming. This mechanism, unlike traditional centralized system, involves two independent enterprises linked by material and non-strategic information flows, which interact with each other in order to coordinate their operations planning, and to improve their individual and collective performance. In this approach, only a few coordination solutions (pairs of coordinated operations plans) are considered and computational analysis shows that this coordination mechanism has the potential to improve global profit, while maintaining fairness in terms of revenue sharing. Finally, in order to develop an approach capable of supporting the dynamic coordination of operations planning in a rolling horizon context, this thesis first proposes a negotiation strategy for the supplier, as well as a revenue sharing protocol. Computational analysis shows that the proposed approach produces a win-win strategy for two partners of supply chain and improves the results of upstream planning

An analysis of the effect of supply chain and manufacturing parameters on inventory cost reduction for push type manufacturing systems

In the global network of businesses, supply chain and order fulfillment managements are the most critical functional departments to determine the winner of the global competition. In this research a network of companies that are flowing information, product and services between providers and a receiver is investigated in order to gain a better insight of the current situation. Analyses, explanations and solutions were developed through responding to the following research questions: (1) What are the most important variables that affect the quality and delivery performances of a supply chain? (2) What are the most important variables that affect the service rate or fill rate of a supply chain of a manufacturing company? (3) What levels of the selected variables could be used in order to minimize inventory on hand? The research was based on the analysis of a supplier network of a midwestern manufacturing company. Initial study verified that there was no company policy established to prevent stock-outs resulting from late deliveries or quality nonconforming parts. In order to investigate the effects of existing company policies and guidelines a discrete event simulation model was developed. During the model building phase historic data was utilized to create simulation parameters. Analysis of the historic data revealed that neither the production lead time nor the schedule changes affect the quality or delivery performance of suppliers. The results of the simulation confirm the importance of the number of suppliers in a supply chain. The number of suppliers negatively affects the efficiency of the order fulfillment process and high numbers of suppliers require higher inventory levels. The company\u27s supplier classification guideline was also validated for delivery performance ratings by the simulation model. However, the supplier classification based on the quality performance was not found to be practically significant

Vendor-Buyer Coordination in Supply Chains

Collaboration between firms in order to coordinate supply chain operations can lead to both strategic and operational benefits. Many advanced forms of collaboration arrangements between firms exist with the aim to coordinate supply chain decisions and to reap these benefits. This dissertation contributes to the understanding of the conditions that are necessary for collaboration in such arrangements and the benefits that can be realized of such collaboration arrangements. This dissertation focuses on the vendor-buyer dyad in the supply chain. We identify and categorize collaboration arrangements that exist in practice, based on a review of the literature and combine this with formal analytical models in the literature. An important factor in the benefits of collaboration is the benefit of reduced costs of transport, by realization of economies of scale in the context of capacity-constrained trucks. As a contribution to the understanding of the dependence of transport costs on the volume transported, we demonstrate how transport tariffs for orders of less-than-a-truckload in size on a single link can be deduced from a basic model. The success of a collaboration arrangement depends on agreement about the distribution of decision authority and collaboration-benefits. We study a collaboration arrangement in which the vendor takes responsibility for managing the buyer's inventory and makes it economically attractive to the buyer by offering a financial incentive, dependent on the maximum level the buyer permits to be stocked. This dissertation demonstrates that this incentive alignment leads to considerable cost savings and near-optimal supply chain decisions

Decision-making experiments on dual sales channel coordination

In this thesis, we conduct an experimental study with human decision makers, on dual sales channel coordination. We aim to determine dual channel strategies for a manufacturer who sells its product thorough both an independent retailer channel and its totally owned direct online channel. The two channels compete on service, where the service level of the retailer channel is measured with its product availability level, and the service level of the direct channel is measured with its delivery lead time. This multi-stage game-theoretical model was previously solved for the wholesale price contract (Chen et al. 2008) and buyback contract (Gökduman and Kaya 2009) cases. We compare these models' theoretical predictions with the outcome of our experiments with human decision makers. In particular, we analyze the theoretical and observed coordination performance of the wholesale price and buyback contracts between the two firms. We identify deviations from theoretical predictions that can be attributed to behavioral factors, such as risk aversion