Supply chain lead times

Quick response is the set of actions a supply chain takes to reduce the replenishment lead time. Supply chain managers are able to improve their forecast accuracy as lead times decrease, which allows them to better match supply with demand and increase supply chain profitability. We have discussed the benefits of lead time reduction for regularly stocked itans such as detergent in Chapter 12 (see Example 12-6). We now focus on the benefits of lead time reduction for seasonal items. 

Detailed acquisition of data before the actual model is created leads to increased transparency of the procedures and thus usually has its own intrinsic value. However, the effort to collect and prepare data for a simulation study should not be underestimated. As a rule of thumb, the data collection sums up to one third of a simulation project s time budget. In supply chain studies, where data of several production sites may be needed, the expenses for data collection may even be higher. 

Boeken P, Kotlik L (2001) Optimierung der Supply Chain in der pharmazeuti-schen Industrie, A.D. Little (ed.) Einkauf - Produktion - Logistik, pp 67-74 Bogataj M, Bogataj L (2004) On the compact presentation of the lead times perturbations in distribution networks. International Journal of Production Economics 88 145-155... 

Over the course of time, however, leading distributors like Brenntag developed more and more towards the concept of supply chain management. Today, chemical distributors play a number of essential roles in the value chain between chemical producers and consumers (Fig. 12.1). 

The only way to avoid this is by strict analysis of the supply chain from the customer order to final product delivery. Definition of the optimized (theoretical) process and sequential work towards a high service level approach allow the identification of gaps, and of opportunities which might not always be the cheapest (ship versus train versus plane) but could be the most effective way to reduce capital costs and shorten planning scope - an important aspect, especially in volatile customer markets with long production processes on the (chemical) supplier side. As in the case of CIP, this needs clear parameters, KPIs, commitment from all players, and regular tracking. The most important parameters are the lead time for all products, optimal lot sizes, replenishment points, and safety inventories. 

Figure 22.5 shows how product, customer, and market characteristics can determine different SCM strategies and design implications. For example, the strategic choice to serve niche customers with high price specialty chemicals is only tenable if the high-value inventory is centralized to reduce costs, and if a fast, responsive supply chain is set up to fill customer orders within the requested lead time from central inventory. 

As described in Section 1.1, the goal of the simulation study is to quantify the relationships between the simulation outputs and the inputs or factors. For this case study, the outputs are the steady-state mean costs of the whole supply chain (discussed in Section 3.2) and the inputs are factors such as lead-time, quality, operation time of an individual process, and number of resources. Our ultimate goal (as reported by Kleijnen et al., 2003) is to find robust solutions for the supply chain problem. Thus we distinguish between two types of factors ... 

At present, the sector is lacking the infrastructure for the manufacture of antibodies to come. Despite major investments however, the high demands and long lead times prohibit a short-term solution other than a significant increase in overall productivity to close the current gaps in bio-pharmaceutical supply chains. 

The lure of parametric release to commercial organizations is undoubtably monetary, either as reduced inventory costs or as reduced lead times within the supply chain. The cost balancing this out is better process control. From the standpoints of quality, sterility assurance, and responsibility to the recipient of the sterile product, the loss of a wholly inadequate end-product test is a low price to pay for more attention being given to the process characteristics that really influence sterility. 

In this chapter we have provided a quick review of four possible approaches to forecast demand and its use in planning. The constant demand model allows for a quick analysis of the effect of ordering costs in a system. The models of demand as a distribution permit details of lead time and demand uncertainty to be included. The modeling of demands as a mixture of distributions enables us to consider the role of information acquired over time. Finally, the exponential smoothing model shows how demand forecast updating can create large swings upstream in a supply chain. 

Uncertainty breeds inventory. Managers involved in transportation often have to make planning decisions, like routing, that directly affect the movement of raw materials or finished goods. These decisions often affect other components in the supply chain network, in which case the transportation management team cannot afford to make an incorrect decision. Consequently, any mistakes not only jeopardize other elements within the system but also lead to customer dissatisfaction created by the delay in the delivery times (Quirm 1998). 

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