Factory Gate Pricing: An Analysis of the Dutch Retail Distribution

Factory Gate Pricing (FGP) is a relatively new phenomenon in retail distribution.Under FGP, products are no longer delivered at the retailer distribution center, but collected by the retailer at the factory gates of the suppliers.Owing to both the asymmetry in the distribution networks (the supplier sites greatly outnumber the retailer distribution centers) and the better inventory and transport coordination mechanisms, this is likely to result in high savings.A mathematical model was used to analyze the benefits of FGP for a case study in the Dutch retail sector.Extensive numerical results are presented to show the effect of the orchestration shift from supplier to retailer, the improved coordination mechanisms, and sector-wide cooperation.pricing;retailing;distribution;supply chain management;Netherlands

Factory Gate Pricing: An Analysis of the Dutch Retail Distribution

Factory Gate Pricing (FGP) is a relatively new phenomenon in retail distribution. Under FGP, products are no longer delivered at the retailer distribution center, but collected by the retailer at the factory gates of the suppliers. Owing to both the asymmetry in the distribution networks (the supplier sites greatly outnumber the retailer distribution centers) and the better inventory and transport coordination mechanisms, this is likely to result in high savings. A mathematical model was used to analyze the benefits of FGP for a case study in the Dutch retail sector. Extensive numerical results are presented to show the effect of the orchestration shift from supplier to retailer, the improved coordination mechanisms, and sector-wide cooperation.supply chain management;factory gate pricing;retail distribution

On the inventory routing problem with stationary stochastic demand rate

One of the most significant paradigm shifts of present business management is that individual businesses no longer participate as solely independent entities, but rather as supply chains (Lambert and Cooper, 2000). Therefore, the management of multiple relationships across the supply chain such as flow of materials, information, and finances is being referred to as supply chain management (SCM). SCM involves coordinating and integrating these multiple relationships within and among companies, so that it can improve the global performance of the supply chain. In this dissertation, we discuss the issue of integrating the two processes in the supply chain related, respectively, to inventory management and routing policies. The challenging problem of coordinating the inventory management and transportation planning decisions in the same time, is known as the inventory routing problem (IRP). The IRP is one of the challenging optimization problems in logis-tics and supply chain management. It aims at optimally integrating inventory control and vehicle routing operations in a supply network. In general, IRP arises as an underlying optimization problem in situations involving simultaneous optimization of inventory and distribution decisions. Its main goal is to determine an optimal distribution policy, consisting of a set of vehicle routes, delivery quantities and delivery times that minimizes the total inventory holding and transportation costs. This is a typical logistical optimization problem that arises in supply chains implementing a vendor managed inventory (VMI) policy. VMI is an agreement between a supplier and his regular retailers according to which retailers agree to the alternative that the supplier decides the timing and size of the deliveries. This agreement grants the supplier the full authority to manage inventories at his retailers'. This allows the supplier to act proactively and take responsibility for the inventory management of his regular retailers, instead of reacting to the orders placed by these retailers. In practice, implementing policies such as VMI has proven to considerably improve the overall performance of the supply network, see for example Lee and Seungjin (2008), Andersson et al. (2010) and Coelho et al. (2014). This dissertation focuses mainly on the single-warehouse, multiple-retailer (SWMR) system, in which a supplier serves a set of retailers from a single warehouse. In the first situation, we assume that all retailers face a deterministic, constant demand rate and in the second condition, we assume that all retailers consume the product at a stochastic stationary rate. The primary objective is to decide when and how many units to be delivered from the supplier to the warehouse and from the warehouse to retailers so as to minimize total transportation and inventory holding costs over the finite horizon without any shortages

The integrated deterministic model for a vendor manage inventory in a two-stage supply chain

In a two-stage supply chain system, vendor managed inventory (VMI) policies is an integrating decisions between a supplier and his retailers.The supplier assumes the responsibility of maintaining inventory at its retailers and ensuring that they will not run out of stock at any moment.This paper discusses an optimization approach, considering the model of static demand on the inbound as well as the outbound inventory for a two-stage supply chain implementing VMI. In the proposed solutions for coordinating the single warehouse multiple-retailers (SWMR) system, retailers are first clustered to minimize the within-cluster travel costs and distances and are then replenished using an optimal direct shipping strategy satisfying some additional restriction

E-Fulfillment and Multi-Channel Distribution – A Review

This review addresses the specific supply chain management issues of Internet fulfillment in a multi-channel environment. It provides a systematic overview of managerial planning tasks and reviews corresponding quantitative models. In this way, we aim to enhance the understanding of multi-channel e-fulfillment and to identify gaps between relevant managerial issues and academic literature, thereby indicating directions for future research. One of the recurrent patterns in today’s e-commerce operations is the combination of ‘bricks-and-clicks’, the integration of e-fulfillment into a portfolio of multiple alternative distribution channels. From a supply chain management perspective, multi-channel distribution provides opportunities for serving different customer segments, creating synergies, and exploiting economies of scale. However, in order to successfully exploit these opportunities companies need to master novel challenges. In particular, the design of a multi-channel distribution system requires a constant trade-off between process integration and separation across multiple channels. In addition, sales and operations decisions are ever more tightly intertwined as delivery and after-sales services are becoming key components of the product offering.Distribution;E-fulfillment;Literature Review;Online Retailing

Factory Gate Pricing: An Analysis of the Dutch Retail Distribution

Factory Gate Pricing (FGP) is a relatively new phenomenon in retail distribution. Under FGP, products are no longer delivered at the retailer distribution center, but collected by the retailer at the factory gates of the suppliers. Owing to both the asymmetry in the distribution networks (the supplier sites greatly outnumber the retailer distribution centers) and the better inventory and transport coordination mechanisms, this is likely to result in high savings. A mathematical model was used to analyze the benefits of FGP for a case study in the Dutch retail sector. Extensive numerical results are presented to show the effect of the orchestration shift from supplier to retailer, the improved coordination mechanisms, and sector-wide cooperation

Inventory routing problem with stochastic demand and lead time

In the supply chain, the integration of the different processes is critical to obtain high levels of coordination. Inventory control and its distribution are two of these processes whose coordination have been demonstrated by researchers as key in order to gain efficiency and effectiveness. They affect the synchronization of the supply chain management. With the intention to contribute to the integration of these processes and improve the problems of demand variability, we propose an integration of operations research area and the help of metaheuristics in a multi-objective approach. The expected results are to reduce the costs associated with inventory and its distribution, as well as to reduce the uncertainty in making decisions based on demand. This thesis presents methods for obtaining and analyzing near optimally solutions for dynamic and stochastic inventory-routing problems. The methods include retailers selection and clustering methods, algorithms and experiments on benchmark instances. We focus on problems with one and several suppliers that serve several dispersal geographically retailers. The thesis contains four parts. In Part I, we focus on the literature review. We first provide an overview of the literature on problems related to the coordination of the inventory and its distribution. Then we make a point in four elements: information management, inventory policies, stochastic demand and optimization methods. Also, we provide a scientometric analysis of the documentation collected in the last ten years. We provide a thorough review of papers working with dynamic and stochastic demand. The contributions of this part are i) the review of papers working with stochastic demand and stochastic lead times focusing on its stochastic and multi-depot aspects, ii) identify critical factors for the performance of many logistics activities and industries, iii) have shown that studying the behavior of the demand and the lead time are essential in order to achieve a useful representation of the system to take proper decisions and iv) provide the trends and patterns in the research in IRP problems. In Part II, we focus on the methodology of the research and of development. We first introduce the problem, state of the science, the gaps in the literature, variables under study, the instruments applied and assumptions. The development methodology is presented by a general model to address this type of research proposed in this thesis. Here, the general development process, decomposition of the problem and how the possible solutions are explained.. The importance of the this chapter is provided an effective way to face IRP problems. In Part III, the foundations in formulations for IRP problems are proposed. We begin with the formulation of the TSP problems with variants for one and many suppliers, likewise for VRP and IRP problems. The contributions of the model presented here aim identifying the variables and mathematical models frequently used to deal with these problems. In Part IV, we perform a single criteria objective and multi-criteria analysis of the solutions for one and many suppliers instances. Our methods yield significant improvements over a competing algorithm. Our contributions are i) propose three new customer selection methods for a dynamic and stochastic inventory-routing vii problem, ii) perform a multi-criteria analysis of the solutions, comparing distribution versus inventory management, iii) perform a single criteria objective experiment on benchmark instances from the literature.En la cadena de suministro, la integración de los diferentes procesos que la conforman, es fundamental para obtener altos niveles de coordinación. El control del inventario y su distribución son dos de estos procesos, cuya coordinación ha sido demostrada por los investigadores como clave para lograr mejoras en eficiencia y efectividad. Estos a su vez, afectan la sincronización y la administración de la cadena de suministro. Con el propósito de contribuir en la integración de éstos procesos y mejorar los problemas derivados de la variabilidad de la demanda, se propone usar los fundamentos del área de investigación de operaciones y la ayuda de metaheurísticas en un enfoque multi-obejtivo. Los resultados esperados son reducir los costos asociados a los procesos de inventario y distribución, así como también reducir la incertidumbre en la toma de decisiones a partir de la demanda. Ésta tesis presenta métodos para el análisis y obtención de soluciones cercanas a las óptimas para problemas de inventario y routeo, dinámico y estocástico. Los métodos incluyen selección de retailers y métodos de clustering, algoritmos y experimentos en instancias de prueba disponibles en la literatura. Se hace énfasis en instancias de un solo proveedor y varios proveedores que sirven varios retailers distribuidos geográficamente. La tesis está organizada en cuatro partes. En la Parte I, se revisa la literatura, para ello, primero se presentan los problemas relacionados con la coordinación del inventario y su distribución. Ésta revisión resalta cuatro elementos que han sido identificados como claves en la literatura como son: la administración de la información, políticas de inventario, demanda estocástica y métodos de optimización. Luego, se presenta un análisis cienciometrico de la literatura encontrada en los últimos 10 años. La revisión de la documentación se realiza de manera exhaustiva trabajando con demanda dinámica y estocástica. Las contribuciones de esta parte son: i) proporcionar una revisión pertinente y actualizada de artículos que emplean demanda estocástica, enfatizando en sus elementos dinámicos y estocásticos, así como también en aspectos que permitan abordar problemas con múltiples depósitos, ii) identificar factores críticos para el desempeño de actividades logísticas, iii) Demostrar que el estudio de la demanda es esencial para lograr una representación útil del sistema, la cual influye en la toma de decisiones y iv) proporcionar tendencias y patrones en la investigación de problemas de IRP. En la Parte II se aborda la metodología de la investigación y de desarrollo. Primero, se presenta el problema, el estado de la ciencia y los gaps encontrados en la literatura. Luego se identifican las variables de estudio, los instrumentos aplicados y los supuestos utilizados. La metodología de desarrollo es presentada por medio de un modelo general para abordar éste tipo de investigaciones que nosotros proponemos en ésta tesis. Esta metodología aborda aspectos como: el procedimiento general de desarrollo, la descomposición del problema y la forma en que se prueban las posibles soluciones. En la Parte III, se presentan los fundamentos en la formulación de IRP. Primero se formulan los problemas TSP con variantes para un solo depósito y también paramúltiples depósitos, igualmente se hace para VRP e IRP. La contribución de los modelos presentados son la identificación de las variables y los modelos matemáticos que frecuentemente son usados para tratar con éste tipo de problemas. En la Parte IV se presentan dos experimentos. El primero para el análisis de instancias con uno sólo depósito y en el segundo para analizar instancias con múltiples depósitos. Los métodos usados producen mejoras sobre resultados obtanidos con algoritmos similares. Las contribuciones de ésta parte son: i) proponer tres nuevos métodos para la selección de retailers para IRP dinámicos y estocásticos, ii) realizar análisis multi-criterio de las soluciones, comparando la distribución con la administración del inventario y iii) realizar análisis de un solo objetivo sobre instancias de pruebas proporcionada por la literatura existente

An inventory control model with interconnected logistic services for vendor inventory management

International audienceThis paper proposes an inventory control model taking advantage of interconnected logistic services in the Physical Internet for fast-moving consumer goods (FMCG) sector. Unlike current hierarchical inventory model where the source of each is pre-assigned, the goods are stored and distributed in an interconnected and open network of PI-hubs which enables storage capacity and transportation sharing among different companies around the network. As a result, theoretically, the suppliers can push their goods all around the network and the retailers can be served by any hub in the network. A non-linear global optimization inventory model to minimize the total logistic costs is proposed and a heuristic using simulated annealing is applied to solve the problem. Numerical experiments are taken to compare the performance of the proposed PI inventory model and classic inventory control model for different settings of a typical supply network. Results suggest that the PI inventory control model can always reduce the total logistic cost while reaching a comparable or improved end customer service level