Supply chain design model

The role of the supply chain design model is to answer the following... 

In general, supply chain simulation can be used along the lifecycle of supply chains, that is from supply chain design to support of supply chain operation. In supply chain design, simulation models can support supply network design (decisions on the location, ramp up or shutdown of production or warehousing sites) as well as the adjustment of control parameters such as safety stock at different... 

Beamon BM (1998) Supply chain design and analysis Models and methods. International Journal of Production Economics 55 281-294... 

Muriel A, Simchi-Levi D (2003) Supply Chain Design and Planning -Applications of Optimization Techniques for Strategic and Tactical Models. In de Kok AG, Graves SC (eds) Supply Chain Management Design, Coordination and Operation. Elsevier, Amsterdam et al., pp 17-93... 

Abstract Transportation and facility location decisions are crucial in strategic supply chain design. Optimization models guide location decisions giving the optimal site selection under certain assumptions and constraints. It is an art to decide which model to use and how to modify the results based on the needs of a company. This chapter presents some of the important optimization models in supply chain. Mathematical formulations and solution procedures are also given. The models can be expanded for multi-echelon supply chains and/or include multiple products. 

This model reflects a physics perspective, however this model might not fit a regular supply chain design since objective function employs a second degree penalty for unit distance travelled. However, gravity location model can give insight for potential location areas. Every model is an abstraction of reality that comes with assumptions. This model is no exception. This model does not take into account the physical features of location areas, i.e. mountainous or not, proximity to labor force or required infrastructure etc. 

Fumero, Y., Corsano, G., and Montagna, J.M. (2013) Integrated modeling framework for supply chain design considering multiproduct production facilities. Industrial Engineering Chemistry Research, 52 (46), 16247-16266. 

The historic definition, as defined by the first and second generation of supply chain pioneers, is limited and applicable to only stages 1 and 2 of the supply chain maturity model in Chapter 1 (Figure 1.3). The basis of the design of these traditional processes is the premise that an underlying pattern in historical customer shipment data can be identified using statistics. Any additional unexplained patterns could be simply addressed as randomness, or an unexplainable variation. These same processes assumed that the patterns (demand signals)— in this case, only trend/cycle and/or seasonality— will continue into the future. 

They presented a reference model for designing business processes in demand-driven fruit supply chains. The model consists of a reference modeling framework that defines process models at different levels of abstraction and includes a method of how they can be composed from a repository of building blocks. However, they did not provide any structured assessment approach to evaluate different business segments/industries in light of demand driven supply chain concepts. 

Propose a responsive supply chain business model Proposed a reference model for designing business processes in demand driven fruit supply chain in Europe Describe the design and implementation of demand driven freight transport application... 

Another reality in Cavinto s spectrum is that, while supply chains can be a source of operating efficiencies and competitive advantage, the lack of effective supply chains will hold a company back. That is, the lack of a formal supply chain design can be dysfunctional when it comes to reaching goals for growth and profits. We will also build the dysfunctional level into our maturity model because we have observed it often. 

So supply chain design, applying Fisher s model, has two branches. For the functional product, it means advances that reduce the cost of sourcing, manufacturing, and distribution. For the innovative product, it means reducing total costs, including market mediation costs. This is a more complex equation because most companies do not — in fact, cannot — track these costs. 

Executing, or execution, processes recognize three supply chain business models Make-to-Stock (MTS), Make-to-Order (MTO), and Engineer-to-Order (ETO). In the MTS company, forecasts drive production requirements. Customer shipments are made from a finished goods inventory. An MTO company has an order in hand before it produces. Boeing s commercial aircraft business and Dell computers are examples. An ETO company must design parts of the product for customer requirements. Each delivered product to a customer is unique. A Configure-to-Order company, not specifically addressed in SCOR, is a hybrid of the MTO and the ETO models. 

Section 5.1.3 described the differences between functional and innovative products. Applying this model, supply chains for functional products must be efficient. So cost is a dominant feature and determinant of supply chain design success. On the other hand, supply chains for innovative products must be responsive. The emphasis is on making high-profit products readily available to the market and minimizing lost sales to supply-demand mismatches. 

In supply chain management (SCM), linkages play the roles of eon-ductor and sheet music. The SCOR model from the Supply-Chain Couneil is an example of one method for coordinating the supply chain. Another example, in the Toyota Production System, is the kanban system that signals the need for more parts. Proactive systems deseribed in Chapter 30 that use business rules to automate decision making are another example. The decision to use any particular technique at a point in time is an important supply chain design feature. 

DC costs and transportation to the stores for the same volume of product are different at different locations for a variety of reasons. This is due to a variety of geographic and demographic factors. The differences may be controllable by supply chain design — or they may not. This should be sorted out in the cost modeling effort. 

Product pipeline, product funnel Visual models of the way new products are developed. The concept infers a repetitive pattern for producing products. Supply chain design should be a part of the product development process. 

We will introduce an analytical model for each of cases listed above. The models help to characterize the role of intermediation, to determine when should they exist, and to understand how could they extract profit while sustaining the trade efficiency. For the incomplete information cases we need to make use of the mechanism design framework and the revelation principle which we will briefly summarize in the following section. In Section 3.3 we will summarize the settings of the four supply chain intermediation models. 

Ball, M.O., Boyson, S., Raschid, L. and V. Sambamurthy, Scalable Supply Chain Infrastructures Models and Analysis , in Proceedings of the 2000 NSF Design Manufacturing Research Conference Vancouver, 2000... 

Beamon [51] reviewed the relevant research on supply chain design and analysis, and proposed some future research directions. Supply chain model is divided into deterministic models, stochastic analytical models, economic models, and simulation models. The future directions of the research include supply chain performance measurement methods, the establishment of the decision-making model and developing standards and technology of supply chain design and analysis. 

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