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

Decentralized and centralized supply chains with trade credit option

The notion of a trade credit period is a common business practice, where a supplier allows a buyer a specified period to make a payment in full for a purchase made. The objective of this thesis is to explore the role of such a credit payment option in supply chain management. Towards this end, a two-echelon supply chain, consisting of a single supplier (e.g. manufacturer) and the cases of both a single and multiple buyers (e.g. retailers) is examined under decentralized (independent) and centralized (coordinated) decision making scenarios. The major emphasis of this research is limited to the case of a single product with price-sensitive deterministic, as well as stochastic market demand.The conditions under which a trade credit period should be offered and its appropriate length are determined from the supplier’s perspective under the decentralized case. Under the centralized decision scenario, the efficacy of a trade credit policy as a supply chain coordination mechanism is thoroughly analyzed and guidelines for pricing, production and delivery decisions are developed. The concepts developed in this study are illustrated via a number of numerical examples, in conjunction with thorough sensitivity analyses involving some selected problem parameters.The major contribution of this thesis is that we incorporate the pricing and inventory issues in supply chains with an endogenous credit payment period. This is the first study that examines the efficacy of trade credit option as a coordination mechanism. We propose a coordination mechanism that coordinates the supply chain, when a trade credit by itself is not sufficient to serve such a purpose, while preserving the benefits of a trade credit option. Also, this study is the first to examine the issues concerning trade credit under price sensitive stochastic demand. Another first for this work is the exploration of the implications of a trade credit policy in supply chains consisting of multiple competing retailers. The effects of the extent of competition and the market size on trade credit policy are evaluated. Our analyses lead to some important practical implications, to serve as managerial guidelines.Ph.D., Decision Sciences -- Drexel University, 201

Creating shared value:An operations and supply chain management perspective

Focusing solely on short-term profits has caused social, environmental, and economic problems. Creating shared value integrates profitability with social and environmental objectives, offering a holistic solution. This dissertation examines two areas where this integration is crucial. The first topic explores servicizing business models for a transition to a more circular economy, emphasizing environmental benefits and firm profitability. Initially, we focus on pricing policies, comparing pricing schemes across consumer segments to identify win-win-win strategies that meet all people, planet, and profit objectives. Our research reveals that pay-per-use schemes outperform pay-per-period schemes for cost-inefficient or small-scale providers. A win-win (profit and planet) strategy can be achieved by offering a pay-per-use policy to high usage-valuation consumers, but a win-win-win strategy is unattainable. We then investigate consumer choices in servicizing models by conducting a conjoint experiment on payment scheme, price, minimum contract duration, and entry label attributes. The payment scheme emerges as the most influential attribute, with purchasing and pay-per-use schemes being popular options. The second topic focuses on drug shortages. Specifically, we examine the impact of tendering on shortages. Our findings demonstrate that tendering reduces prices but increases shortages, particularly at the beginning of contracts. However, shortages are less severe when alternative suppliers are available, and the market is less concentrated. To address this issue, we propose allowing multiple winners, regionalizing tenders, increasing the time between tender and contract initiation, and incorporating a reliability measure as a winning criterion to mitigate shortages

Optimising supermarket promotions of fast moving consumer goods using disaggregated sales data: A case study of Tesco and their small and medium sized suppliers

The use of price promotions for fast moving consumer goods (FMCG’s) by supermarkets has increased substantially over the last decade, with significant implications for all stakeholders (suppliers, service providers & retailers) in terms of profitability and waste. The overall impact of price promotions depends on the complex interplay of demand and supply side factors, which has received limited attention in the academic literature. There is anecdotal evidence that in many cases, and particularly for products supplied by small and medium sized enterprises (SMEs), price promotions are implemented with limited understanding of these factors, resulting in missed opportunities for sales and the generation of avoidable promotional waste. This is particularly dangerous for SMEs who are often operating with tight margins and limited resources. A better understanding of consumer demand, through the use of disaggregated sales data (by shopper segment and store type) can facilitate more accurate forecasting of promotional uplifts and more effective allocation of stock, to maximise promotional sales and minimise promotional waste. However, there is little evidence that disaggregated data is widely or routinely used by supermarkets or their suppliers, particularly for those products supplied by SMEs. Moreover, the bulk of the published research regarding the impact of price promotions is either focussed on modelling consumer response, using claimed behaviour or highly aggregated scanner data or replenishment processes (frameworks and models) that bear little resemblance to the way in which the majority of food SMEs operate. This thesis explores the scope for improving the planning and execution of supermarket promotions, in the specific context of products supplied by SME, through the use of dis-aggregated sales data to forecast promotional sales and allocate promotional stock. An innovative case study methodology is used combining qualitative research to explore the promotional processes used by SMEs supplying the UK’s largest supermarket, Tesco, and simulation modelling, using supermarket loyalty card data and store level sales data, to estimate short term promotional impacts under different scenarios and derive optimize stock allocations using mixed integer linear programming (MILP). ii The results suggest that promotions are often designed, planned and executed with little formalised analysis or use of dis-aggregated sales data and with limited consideration of the interplay between supply and demand. The simulation modelling and MILP demonstrate the benefits of using supermarket loyalty card data and store level sales data to forecast demand and allocate stocks, through higher promotional uplifts and reduced levels of promotional wast

Creating shared value:An operations and supply chain management perspective

Focusing solely on short-term profits has caused social, environmental, and economic problems. Creating shared value integrates profitability with social and environmental objectives, offering a holistic solution. This dissertation examines two areas where this integration is crucial. The first topic explores servicizing business models for a transition to a more circular economy, emphasizing environmental benefits and firm profitability. Initially, we focus on pricing policies, comparing pricing schemes across consumer segments to identify win-win-win strategies that meet all people, planet, and profit objectives. Our research reveals that pay-per-use schemes outperform pay-per-period schemes for cost-inefficient or small-scale providers. A win-win (profit and planet) strategy can be achieved by offering a pay-per-use policy to high usage-valuation consumers, but a win-win-win strategy is unattainable. We then investigate consumer choices in servicizing models by conducting a conjoint experiment on payment scheme, price, minimum contract duration, and entry label attributes. The payment scheme emerges as the most influential attribute, with purchasing and pay-per-use schemes being popular options. The second topic focuses on drug shortages. Specifically, we examine the impact of tendering on shortages. Our findings demonstrate that tendering reduces prices but increases shortages, particularly at the beginning of contracts. However, shortages are less severe when alternative suppliers are available, and the market is less concentrated. To address this issue, we propose allowing multiple winners, regionalizing tenders, increasing the time between tender and contract initiation, and incorporating a reliability measure as a winning criterion to mitigate shortages

Orchestration of External Resources

The way economic value is created is fundamentally changing. As a result of increased utilization of resources of suppliers and partners, the cost of purchased goods and services can be even 70-80% of revenue. These suppliers and partners producing the majority of the costs, value and innovation of a company can be considered as the external resources of a company. Management of external resources is problematic for companies, as rules which apply for internal management do not apply as such. At the same time relying on pure market approaches is neither a sufficient approach. From a governance model theory perspective new, network and hybrid forms have emerged.  In the research reported here, the practices for management of upstream external resources are investigated from a focal company perspective. The research is scoped around practices of a manufacturing company. The research question is: How a focal company can manage its supplier base in different managerial situations?  Findings of this research demonstrate that the concept of orchestration is relevant from the external resource management point of view, and it can be identified empirically. The concept of orchestration is characterized as an activity, where a company is intentionally leading and influencing its external resources beyond the set of operative activities it conducts itself.  In order to develop a strategy for external resource management, a firm must identify and define its business objectives. This should be done both from the overall company perspective, and also for each of the buyer-supplier relationships, choosing between innovation focus and cost competitiveness focus. Additionally, the business objectives must be combined with an intended governance approach in order to develop an appropriate strategy for external resource management. As a part of this research, a categorization model for management situations is developed. The buyer-supplier relationships can be arranged according to the dimensions of relationship focus – between cost and innovation, and governance approach – between bilateral and unilateral governance. For each of the situations it is necessary to adapt a suitable managerial practice. Findings from the research suggest, that the practices related to orchestration of external resources can be divided to four broader clusters: value positioning, product and network architecture, relationship governance practices, and operative management practices.Taloudellista arvon luomisen tavat ovat muutoksessa perustavaa laatua olevalla tavalla. Toimittajien ja kumppanien osuus arvontuotannosta kasvaa niin, että yrityksen ulkopuolelta hankittujen tavaroiden ja palveluiden osuus voi olla jopa 70-80% liikevaihdosta. Näitä toimittajia ja kumppaneita, jotka tuottavat suurimman osan sekä kustannuksista että monesti myös innovaatioista, voidaan pitää yrityksen ulkoisina resursseina. Ulkoisten resurssien hallinta on ongelmallista pääosalle yrityksistä, sillä sisäisiä toimintatapoja ei voida hyödyntää sellaisenaan ulkoisten kumppanien kanssa. Samalla kuitenkin myöskään puhtaasti markkinaehtoiset toimintamallit eivät ole riittäväviä ulkoisten resurssien johtamiseen. Johtamisen näkökulmasta on syntynyt uusia teoreettisia malleja, mm verkostoon perustuvia hallintamalleja sekä hybridimalleja. Tässä tutkimuksessa on selvitetty käytäntöjä ulkoisten resurssien hallintaan, keskittyen valmistavan yrityksen arvoketjun alkupäähän. Tutkimus on tehty ydinyrityksen näkökulmasta. Tutkimuskysymys on: Miten ydinyritys voi johtaa ulkoisia resurssejaan erilaisissa liiketoimintatilanteissa?  Tämän tutkimuksen löydökset keskittyvät neljän teeman ympärille. Tulokset osoittavat, että orkesteroinnin käsitteellä on merkitystä ulkoisesta resurssien hallinnan kannalta, ja että käsitteen mukaista toimintaa voidaan tunnistaa empiirisesti. Käsite orkesterointi luonnehtii toimintaa, jossa yritys tarkoituksellisesti johtaa ja vaikuttaa toimittajiinsa ja partnereihinsa tavoilla, jotka menevät perinteistä operatiivisen toimintaa pidemmälle ja laajentavat perinteistä toimittajaverkoston johtamisen sisältöä.  Jotta voitaisiin kehittää asianmukainen strategia ulkoisten resurssien hallintaan, yrityksen on tunnistettava ja määriteltävä sen liiketoiminnan kokonaistavoitteet. Erityisesti tulee määritellä painottuminen innovaatioiden ja kustannuskilpailukykyyn keskittymisen välillä. Lisäksi liiketoiminnan tavoitteet on yhdistettävä tavoiteltuun johtamisotteeseen. Osana tätä tutkimusta kehitettiin luokittelumalli johtamistilanteiden tunnistamiseksi. Ostaja-toimittajasuhteet voidaan järjestää tämän mallin dimensioiden mukaan. Vastaavasti orkesterointikäytännöt voidaan mukauttaa tilanteeseen sopiviksi johtamisprofiileiksi. Tutkimus osoittaa, että ulkoisten resurssien orkesterointikäytännöt voidaan jakaa neljään laajempaan ryhmään: arvon tuottamisen strategiaan, tuotteen ja verkon arkkitehtuurin johtamiseen, suhteen hallinnointiin, sekä operatiivisen rajapinnan käytäntöihin. Nämä neljä ryhmää käytäntöjä muodostavat perustan ulkoisten resurssien orkestroinnille

Kuluttajatuotteiden toimitusketjun kehittäminen: tapaustutkimus suomalaisessa energiayhtiössä

This master’s thesis studies how a non-manufacturing firm should design and manage a supply chain for consumer products in a global environment where the firm has limited experience and competence on managing material flows to consumer customers. Existing literature on supply chain design and management is highly focused on manufacturing companies and thus, this study tries to fill this knowledge gap by addressing non-manufacturing companies with purchasing-intensive operations. The study follows a problem-solving focused research approach, design science, by dividing the research into two main phases. First, a literature review is conducted focusing on the themes of supply chain design and management in order to highlight the major elements is prior research and to form a theoretical foundation for the practical solution. Second, a case study is conducted in a Finnish utility company to develop, test and evaluate the solution’s applicability in the context of the case company. Research indicates that supply chain design process starts by analyzing product types, customer needs and marketplace requirements, and linking the supply chain strategy and type to the firm’s context. It was found that a supply chain combining lean and agile, leagile, was most suitable for the case company. After determining the supply chain type, the actual supply chain structure is formed. A primary decision factor is the degree of logistics postponement which determines the number and location of warehouses and distribution channel choices in the supply chain. Finally, supply chain management must be ensured by defining the basic processes and the required level supply chain integration with external actors. The proposed solution provides concrete guidelines and decision factors related to supply chain design and management to be utilized in a purchasing-intensive supply chain environment solving the case company’s problem. Additional benefits for the case company include increased supply chain understanding, more efficient and simple material flows, and probable operational performance improvements. Research partly confirms existing theory by showing that certain elements in traditional supply chain design and management theory can also be applied in a purchasing-intensive environment lacking manufacturing operations. In addition, research identifies elements and decisions factors that are relevant especially for non-manufacturing companies such as the high focus on inventory management.Diplomityö tutkii miten hankintaan keskittyvän yrityksen tulisi suunnitella ja hallita toimitusketjuaan ympäristössä, jossa sillä ei ole aikaisempaa kokemusta tuotteiden toimittamisesta kuluttaja-asiakkaille. Aikaisempi tutkimus toimitusketjun suunnittelun ja hallinnan alueilla on painottunut valmistaviin yrityksiin, joten tutkimus pyrkii luomaan uutta tietoa tutkimalla yrityksiä, joilla ei ole omaa valmistusta ja näin keskittyen valmiiden tuotteiden hankintaan toimittajilta. Tutkimus noudattaa suunnittelutieteen (design science) lähestymistapaa pyrkien ratkaisemaan yrityksen konkreettisen ongelman ratkaisuehdotuksella. Tutkimusprosessi aloitettiin kirjallisuuskatsauksella keskittyen pääosin toimitusketjun suunnitteluun ja hallintaan liittyvään kirjallisuuteen tavoitteena tunnistaa tutkimusalueen pääteemat sekä luoda teoreettinen pohja ratkaisuehdotukselle. Tutkimuksen toinen vaihe suoritettiin tapaustutkimuksena suomalaisessa yrityksessä, missä ratkaisuehdotusta kehitettiin edelleen ja lopulta sen toimivuutta arvioitiin tapausyrityksen kontekstissa. Tutkimus osoittaa, että toimitusketjun suunnittelu tulee aloittaa tuotetyyppien, asiakastarpeiden sekä toimintaympäristön analysoinnilla. Lisäksi on tärkeää, että toimitusketjustrategia ja -tyyppi linkitetään aina yrityksen kontekstiin. Tehokasta (lean) ja ketterää (agile) yhdistävän toimitusketjutyypin havaittiin olevan paras ratkaisu tapausyritykselle. Toimitusketjutyypin valitsemisen jälkeen määritetään ketjun varsinainen rakenne, joka hankintaan keskittyvillä yrityksillä liittyy vahvasti siihen kuinka paljon logistiikkaa viivästytetään. Viivästyttämisen aste pääosin määrittää varastojen määrä ja paikan sekä jakelukanavat toimitusketjussa. Viimeisenä on määritettävä prosessit toimitusketjun hallintaan sekä missä määrin on tarpeen tehdä yhteistyötä yrityksen ulkopuolisten toimijoiden kanssa. Esitetty ratkaisu tarjoaa tapausyritykselle konkreettisia suuntaviivoja ja ohjeita toimitusketjun suunnitteluun ja hallintaan hankintaan painottuvassa toimintaympäristössä. Ratkaisu tarjoaa lisäksi yritykselle lukuisia käytännön hyötyjä kuten lisääntyneen toimitusketjutuntemuksen, tehokkaammat ja yksikertaisemmat materiaalivirrat sekä todennäköisesti kasvavan toimitusketjun suorituskyvyn. Tutkimus osaltaan vahvistaa olemassa olevaa teoriaa näyttäen, että valmistaviin yrityksiin keskittyvää teoriaa ja malleja voidaan hyödyntää myös hankintaan keskittyvässä toimitusketjussa. Lisäksi tutkimus tuottaa uutta hyödyllistä tietoa mitkä elementit ja kriteerit ovat erityisen tärkeitä nimenomaan hankintaan keskittyville yrityksille ilman omaa tuotevalmistusta