Questioning the relentless shift to offshore manufacturing

The last 20 years has seen a relentless shift to offshore manufacturing as retailers chase ever-lower labor costs. The results of this strategy can now be evaluated and we propose that some adjustments are in order. We analyze the case of a North American apparel manufacturer (Griffin Manufacturing, Inc.) that has successfully emerged from a period of major change with a strong and strategic position in the apparel supply chain. This case study documents Griffin’s survival through evolution in capabilities, technology, and especially attitude. The Griffin case study suggests that keeping a portion of the manufacturing onshore at an agile, quick response factory is cost effective: it increases sales and improves margins. However, the new relationship between the parties is much more complex and requires commitment on both sides

Inventory management for stochastic lead times with order crossovers

This is the author accepted manuscript. The final version is available from Elsevier via the DOI in this recordWe study the impact of stochastic lead times with order crossover on inventory costs and safety stocks in the order-up-to (OUT) policy. To motivate our research we present global logistics data which violates the traditional assumption that lead time demand is normally distributed. We also observe that order crossover is a common and important phenomenon in real supply chains. We present a new method for determining the distribution of the number of open orders. Using this method we identify the distribution of inventory levels when orders and the work-in-process are correlated. This correlation is present when demand is auto-correlated, demand forecasts are generated with non-optimal methods, or when certain ordering policies are present. Our method allows us to obtain exact safety stock requirements for the so-called proportional order-up-to (POUT) policy, a popular, implementable, linear generalization of the OUT policy. We highlight that the OUT replenishment policy is not cost optimal in global supply chains, as we are able to demonstrate the POUT policy always outperforms it under order cross-over. We show that unlike the constant lead-time case, minimum safety stocks and minimal inventory variance do not always lead to minimum costs under stochastic lead-times with order crossover. We also highlight an interesting side effect of minimizing inventory costs under stochastic lead times with order crossover with the POUT policy - an often significant reduction in the order variance

Managing demand uncertainty via product and process innovation

We consider two simple variants of a framework for reasoning about knowledge amongst communicating groups of players. Our goal is to clarify the resulting epistemic issues. In particular, we investigate what is the impact of common knowledge of the underlying hypergraph connecting the players, and under what conditions common knowledge distributes over disjunction. We also obtain two versions of the classic result that common knowledge cannot be achieved in the absence of a simultaneous event (here a message sent to the whole group).

Optimization of total inventory cost and order fill rate in a supply chain using PSO

This paper proposes a method to optimize both the total cost and order fill rates in a supply chain using the particle swarm optimization (PSO) method. This method automatically adjusts the initial inventory levels of all tiers involved in a supply chain by considering information quality level (IQL), which is determined by the degree of availability of lead time history data. Analyses of variance are used to examine if there are any effects of IQL on the total cost and order fill rates. The results show that the proposed method finds better solutions which provide a lower inventory level while maintaining higher order fill rates than when PSO is not applied.close0