Virtual transshipments and revenue-sharing contracts in supply chain management

This dissertation presents the use of virtual transshipments and revenue-sharing contracts for inventory control in a small scale supply chain. The main objective is to maximize the total profit in a centralized supply chain or maximize the supply chain\u27s profit while keeping the individual components\u27 incentives in a decentralized supply chain. First, a centralized supply chain with two capacitated manufacturing plants situated in two distinct geographical regions is considered. Normally, demand in each region is mostly satisfied by the local plant. However, if the local plant is understocked while the remote one is overstocked, some of the newly generated demand can be assigned to be served by the more remote plant. The sources of the above virtual lateral transshipments, unlike the ones involved in real lateral transshipments, do not need to have nonnegative inventory levels throughout the transshipment process. Besides the theoretical analysis for this centralized supply chain, a computational study is conducted in detail to illustrate the ability of virtual lateral transshipments to reduce the total cost. The impacts of the parameters (unit holding cost, production cost, goodwill cost, etc.) on the cost savings that can be achieved by using the transshipment option are also assessed. Then, a supply chain with one supplier and one retailer is considered where a revenue-sharing contract is adopted. In this revenue-sharing contract, the retailer may obtain the product from the supplier at a less-than-production-cost price, but in exchange, the retailer must share the revenue with the supplier at a pre-set revenuesharing rate. The objective is to maximize the overall supply chain\u27s total profit while upholding the individual components\u27 incentives. A two-stage Stackelberg game is used for the analysis. In this game, one player is the leader and the other one is the follower. The analysis reveals that the party who keeps more than half of the revenue should also be the leader of the Stackelberg game. Furthermore, the adoption of a revenue-sharing contract in a supply chain with two suppliers and one retailer under a limited amount of available funds is analyzed. Using the revenue-sharing contract, the retailer pays a transfer cost rate of the production cost per unit when he obtains the items from the suppliers, and shares the revenue with the suppliers at a pre-set revenue-sharing rate. The two suppliers have different transfer cost rates and revenue-sharing rates. The retailer will earn more profit per unit with a higher transfer cost rate. How the retailer orders items from the two suppliers to maximize his expected profit under limited available funds is analyzed next. Conditions are shown under which the optimal way the retailer orders items from the two suppliers exists

Price risk management strategies in a natural rubber industry: A case study of rubber business intermediaries in Thailand

Commodity prices have been more volatile in recent years. The volatility of prices widely impacts throughout the majority of stakeholder in commodity supply chains. Natural Rubber (NR) is one of the main exporting commodities in Thailand where millions of small farmers rely mainly on the NR producing to generate income for their living and children’s education. The existing literature relevant to commodity Price Risk Management (PRM) is dominated by developed countries in which markets have well-developed infrastructures. Although some research has been conducted in developing countries, most of it focuses on farmers or exporters whilst intermediaries who play a vital role as a middle tier in the supply chain are absent. In NR supply chains, the intermediaries are likely to be the ones who are exposed to the highest risk from price volatility. Their profit margins have diminished due to increasing market power of farmers and their greater accessibility to price information via the internet and mobile phone. Therefore, when NR prices become more fluctuated, the impact on Rubber Business Intermediary (RBI) businesses is even higher than beforehand. This research aims to explore the PRM strategies adopted, and to understand the PRM practiced by RBIs when it comes to managing their business in the south of Thailand. A qualitative method is used as a research approach in this study. 24 RBIs in seven provinces, including the three biggest NR producing provinces in Thailand, were targetted using semi-structured interview and pre-interview questionnaire methods. The interview data was analysed using the template analysis method and NVivo computer software. The findings highlight that the PRM strategies involved in the practices of RBIs are fragmented. This is due to the nature of the uncertainty in business circumstance, and the variety of the RBI’s personal profiles. The PRM strategies adopted by different types of RBIs are varied, as there are various supply chain structures. Moreover, there are even differences in their use amongst the same type of RBIs. This is mainly caused by the diversity in resources and PRM capability on the part of the RBIs. Furthermore, this research also reveals the lack of the advanced PRM tools in the industry for RBIs. They rely mainly upon informal methods provided by their business partners. It is worth noting that these tools, such as a forward contract, are selectively provided to RBIs depending on their relationships and market powers. The accessibility to available PRM tools has a strong linkage to PRM strategies adopted by RBIs. Eventually, adopted PRM strategies incorporated with decisions in risk taking and market channel selection help to determine their business performance. The research concludes by proposing a conceptual model of PRM in practice that is considered to be original and contributes to the industries involved with high-volume and low-margin trading. This research also has implications to novice or existing RBIs, other stakeholders in NR supply chains, such as producers or processors, and policymakers who require more understanding in PRM in practice

Normalizing and Procurement optimization with Supermarket and Asset monitoring

Automobile part suppliers have struggled hard in the past to meet the requirements of the manufacturing companies. The Original Equipment Manufacturers (OEM) are constantly facing demand changes from the customer end. The connected world has raised the expectation of customers to provide cost efficient yet quality automobiles. Part suppliers are stressed to deliver the products in Just-In-Time (JIT) sequence to reduce the bulk stock in the warehouses. The thesis revolves around the review of JIT models in the automobile assembly process. It specially focuses on the importance of supermarket and their uses in providing the parts through tow train scheduling and routing. The models which are already existing are revised by changing certain criteria and combining all the models published into one system to make it easy for the readers to understand. The purpose of the model normalization is to have visibility on quantity of parts needed in supermarket. This is achieved by the normalized routing and scheduling models which exactly tells when, where and the number of parts transported to the desired work floor at specific time just before assembling. This gives the number of parts being used from the supermarket. From this the number of parts needed on the supermarket and subsequently to the warehouse are calculated. The second half of the thesis focuses on procurement optimization after the revised demand of inventory in the warehouse. Procurement optimization paves way for choosing the right supplier according to the volatility in demand. The second half of the thesis discusses about the advantages of super market installation on supplier selection by doing procurement optimization using Mixed Integer Linear Programing. To end the re-search work on the automobile assembly process, the current problems faced by the industry and especially by the suppliers are discussed. A new way to mitigate the supplier loss is discussed with the introduction of Internet of Things (IoT) based solutions by tracking the assets. Asset monitoring devices have been gaining attention worldwide to safely transport the goods without damage. Transparency and visibility is provided in the form of bidirectional gateway process by the wireless asset monitoring devices. Not only the suppliers but also the OEMs are benefitted as it supports the JIT process and faster assembly of the automobiles with less number of damages

Tilaus-toimitusprosessin haasteet ja kehittämismahdollisuudet varaosapalveluissa

Companies must be able to develop their business processes in order to maintain their competitiveness. Core processes are the activities that relate directly to the product of a company and therefore contribute to the creation of value in the company. A supply chain is a cross-organizational core process that can be managed using process management theories and practices. In today’s highly competitive environment, customers are demanding increasingly shorter lead times, supply chain flexibility and real-time tracking possibilities for their orders. This puts huge pressure on the companies to create fast-reactive supply chains that can answer to these customer requirements. In spare part business, the demand can be sporadic and volatile in nature. This makes spare part supply chains especially difficult subjects to manage and control. In spare part business, the fast availability and reliable service are keys to achieving customer satisfaction. The subject of this research was the largest supplier of industrial cranes in the world. The purpose of this study was to recognize the development opportunities in the case unit’s supply chain process. The research work was performed by first analyzing the current state of the process through the modelling and performance analysis executed on the supply chain process. In addition, the bottlenecks and challenges in the supply chain process were recognized in order to find the optimal development opportunities. The research data in this study was gathered through multiple collection methods including key person interviews, brainstorming with colleagues, unstructured observations and gathering data from the company’s business intelligence software in the form of different process performance indicators. The results of this research revealed eight main development opportunities including information flow and sharing practices, documentation and data quality, common working practices, visibility and performance measurement of the whole supply chain, customer communication and cooperation, sourcing and supplier relationship management, claim handling, and motivation and training of employees.Monen nyky-yrityksen toiminta nojaa prosessiorganisaation toimintaperiaatteisiin, jossa yritys tuottaa asiakkailleen lisäarvoa toiminto- ja tehtäväsarjoissa eli prosessien kautta. Yrityksen on pystyttävä kehittämään prosessejaan säilyttääkseen kilpailukykynsä. Ydinprosessit ovat prosesseja, jotka liittyvät suoraan yrityksen tuotteeseen tai palveluun, ja tuottavat siis suoraa arvoa asiakkaalle. Tilaus-toimitusprosessi on yksi yrityksen ydinprosesseista, joka ulottuu eri organisaatioiden yli. Tilaus-toimitusprosessia voidaan hallita ja kehittää prosessijohtamisen tarjoamien teorioiden ja käytäntöjen avulla. Jatkuvasti kiristyvässä kilpailuympäristössä, asiakkaat vaativat yhä lyhyempiä toimitusaikoja, tilaus-toimitusketjun joustavuutta ja mahdollisuutta tilauksen reaaliaikaiseen seurantaan. Tämä luo painetta yrityksille kehittää nopeasti reagoivia tilaus-toimitusprosesseja, jotka pystyvät vastaamaan asiakkaisen kasvaviin tarpeisiin. Varaosaliiketoiminnassa kysyntä voi olla erityisen hajanaista ja vaihtelevaa. Tämä tekee varaosaliiketoiminnan tilaus-toimitusprosesseista erityisen vaikeita hallita. Varaosaliiketoiminnassa pohjan asiakastyytyväisyyden saavuttamiselle luo osien nopea saatavuus ja luotettava palvelu. Tutkimus tehtiin maailman suurimalle teollisten nostolaitteiden valmistajalle. Tutkimuksen tavoitteena oli tunnistaa tilaus-toimitusprosessin kehittämismahdollisuudet case-yksikössä. Tutkimus suoritettiin analysoimalla ensin tilaus-toimitusprosessin nykytilaa. Nykytila-analyysi sisälsi tilaus-toimitusprosessin mallintamisen ja suorituskyvyn analysoimisen. Lisäksi tilaus-toimitusprosessin haasteet ja pullonkaulakohdat tunnistettiin optimaalisten kehitysmahdollisuuksien paljastamiseksi. Tutkimuksen aineistonkeruumenetelmiin kuuluivat avainhenkilöiden haastattelut, strukturoimaton havainnointi, keskustelut ja aivoriihet kollegoiden kanssa sekä avainlukujen kerääminen yrityksen tietojärjestelmistä. Tutkimuksessa tunnistettiin kahdeksan potentiaalista kehitysmahdollisuutta liittyen tiedonjakamisen käytäntöihin, dokumentaatioon ja datan laatuun, yhteisiin työtapoihin, toimitusketjun näkyvyyteen ja mittaukseen, asiakasviestintään ja yhteistyöhön, hankintaan ja toimittajien johtamiseen, reklamaatioiden käsittelyyn ja työntekijöiden motivoimiseen ja kouluttamiseen

Achieving food security in a cost effective way

"This study evaluates the domestic and international trade and marketing policies in India and analyzes the effects of deregulating domestic markets and liberalizing external trade on the food grain sector. Historically, India's food policy has involved heavy government intervention in all aspects of the food grain market pricing, procurement, stocking, transport and marketing. The Food Corporation of India (FCI) is the principal parastatal agency responsible for marketing food grains within the country and controls nearly 50 percent of the grain markets. An analysis of the performance of the FCI, however, reveals enormous and mounting costs of operations that present a huge financial burden for the Government of India (GOI). This study offers a comparison of the costs and functioning of the FCI with that of private traders, in order to suggest policy options for reform. The results show that private traders operate at costs lower than those incurred by the FCI in both storage and trade, despite several controls and restrictions imposed upon them. Therefore, the finding from this study is that there is a strong case for reform from the efficiency point of view." From Author's Executive Summary

The development of a supply chain operations reference model for the telecommunications industry

Thesis (M.Ing) -- University of Stellenbosch, 1999.ENGLISH SUMMARY: The goal of this thesis is to develop a model that will describe the Supply Chain within a telecommunications company. The telecommunications industry within South Africa is faced with a number of changes, the most important of which is the introduction of competition into the market. Telkom, South Africa's telecommunications company, has started with a project of rapid expansion of its network in response to these potential entrants. Skills are being sought that will give the company the edge over its competitors. One of these skills is Supply Chain Management. The telecommunications company is traditionally seen as a service organization. Despite this fact, it has been shown that the company does have manufacturing dimensions. These manufacturing dimensions may be improved by considering the skills used within a traditional manufacturing firm, and applying them to the telecommunications company. One way of introducing these skills is by developing a model that will describe the telecommunications company. This has been done within this thesis. It will be shown that the model is capable of describing the company. It is shown that the use of Supply Chain Management skills and the use of the model could give a telecommunications company the edge over its competitors.AFRIKAANSE OPSOMMING: Die doel van hierdie tesis is die daarstel van 'n model wat die toevoerketting van 'n telekommunikasie maatskappy beskryf. Die telekommunikasie industrie binne Suid-Afrika is besig om groot veranderinge te ondergaan, veral met die bekendstelling van kompetisie tot die industrie. Hierdie bekendstelling van kompetisie het tot 'n skielike groei in die infrastruktuur gelei, so os Suid-Afrika se telekommunikasie maatskappy, Telkom, voorberei vir hierdie kompetisie. Vaardighede word gesoek wat maatskappye die voorsprong sal gee op hul mededingers. Een so 'n voorsprong is die bestuur van die toevoerketting. Alhoewel die telekommunikasie maatskappy tradisioneel gesien word as 'n diensverskaffer, is daar gevind dat dit ook vervaardigings elemente bevat. Hierdie vervaardigings elemente kan heel moontlik beter bestuur word deur te kyk na die vaardighede van vervaardigings ondemernings, en dan hierdie vaardighede toe te pas op die telekommunikasie maatskappy. Een manier om hierdie vaardighede toe te pas, is deur 'n model te ontwikkel wat die telekommunikasie industrie beskryf. Daar is gewys dat die nuwe model wat ontwikkel is weI die industrie kan beskryf. Die tesis wys verder ook dat die tegnieke verbonde aan die bestuur van die toevoerketting sowel as die gebruik van die model, wel 'n telekommunikasie maatskappy kan onderskei van sy mededingers.Maste

Why aren't we looking for lessons about producer-buyer relationships and niche markets in non-export cases? : farmers and wholesalers in El Salvador's central wholesale market

Thesis (M.C.P.)--Massachusetts Institute of Technology, Dept. of Urban Studies and Planning, 2000.Includes bibliographical references (leaves 59-63).Two trends in the development field slow resolving small farmers' difficult entry into marketplaces. The first is that in seeking to enhance small farmer competitiveness, analysts and policy makers tend to look towards production rather than marketing improvements, missing growth linkages to other sectors in which farmers become embedded through their marketing activities. The second is that where marketing is considered, there tends to be a disproportionate focus on non-traditional crops grown for specialty export markets. This paper analyzes how small farmers from the Las Pilas region of El Salvador competed against imports to become potato, cabbage and tomato suppliers to wholesalers in the national wholesale market, the Tiendona. Enduring relationships with buyers in the wholesale market created opportunities and pressures for Las Pilas farmers to market and produce a diversity of crops over the course of 25 years and stimulate linked sectors of their local economy. This type of hands-on, tacit learning about marketing contrasts with 1) supply-driven assistance programs aimed at improving production and; 2) being informed about marketing opportunities by a broker. The analysis suggests that farmer learning through marketing is as important to success in production as learning about production directly. The Tiendona is flooded by Guatemalan and Honduran tomatoes. Long-standing sourcing arrangements between Salvadoran wholesalers and Guatemalan and Honduran growers were altered by small wholesalers' collective actions pressuring the marketplace administration to cede vending space to them. Las Pilas small farmers were then able to enter the marketplace as suppliers to the small wholesalers. The Tiendona's public, contested nature contrasts with export marketing channels where there are few public pressure points to influence marketplace policies and buyers' sourcing decisions. Power asymmetries and coordination problems between producers and buyers can dissuade production. The case examined here finds robust marketing relationships between small wholesalers and small farmers driving crop diversification and production and marketing success.by Daniel J. Moss.M.C.P

Agricultural Value Chains in India

This open access book provides a clear holistic conceptual framework of CISS-F (competitiveness, inclusiveness, sustainability, scalability and access to finance) to analyse the efficiency of value chains of high value agricultural commodities in India. It is based on the understanding that agriculture is an integrated system that connects farming with logistics, processing and marketing. Farmer’s welfare being central to any agricultural policy makes it very pertinent to study how a value chain works and can be strengthened further to realize this policy goal. This book adds value to the existing research by studying the value chains end-to-end across a wide spectrum of agricultural commodities with the holistic lens of CISS-F. It is not enough that a value chain is competitive but not inclusive or it is competitive and inclusive but not sustainable. The issue of scalability is very critical to achieve macro gains in terms of greater farmer outreach and sectoral growth. The research undertaken here brings out some very useful insights for policymaking in terms of what needs to be done better to steer the agricultural value chains towards being more competitive, inclusive, sustainable and scalable. The value chain specific research findings help draw very nuanced policy recommendations as well as present a big picture of the future direction of policy making in agriculture