Supply chain planning

In 1958, Forrester started studies on an effect which is nowadays often referred to as the bullwhip effect. The bullwhip effect describes the amplification of temporal variations of the orders in a supply chain the more one moves away from the retail customer. Forrester showed that small changes in consumer demand result in large variations of orders placed upstream [4, 5]. It is interesting that this effect occurs even if the demand of final products is almost stable. For his studies, he assumed that some time delay exists between placing an order and the realization of this order (production). Furthermore, he assumed that each part of the supply chain plans its production and places its orders upstream taking into account only the information about the demands of its direct customer. 

The concept of successive planning is to decompose the overall decision problem into smaller subproblems and to tackle each of these with a suitable solution methodology. This decomposition often follows the principals of hierarchical planning, as most practical problems can be structured hierarchically. In the area of supply chain management, the so-called supply chain planning matrix is an... 

Fig. 11.1 Supply chain planning matrix (planning tasks, p. 87 in [1]).

The capabilities offered within SAP SCM extend far beyond the scope of this chapter. The key functionalities we will describe in the following are highlighted in Figure 11.6, which is based on the generic supply chain planning matrix (Figure 11.2) introduced in Section 11.2.1. They are part of the SAP Advanced Planner and... 

Fig. TI.6 Supply chain planning matrix using SAP SCM terminology.

Supply Chain Planning Matrix the Supply Chain Planning (SCP) Matrix provides a framework for supply chain management (Rohde et al. 2000, reviewed among others by Fleischmann et al. 2004, pp. 87-92) illustrated in fig. 14. 

Here, it can bee seen that system modules are not directly matched to process structures defined in the Supply Chain Planning Matrix. Also, the asymmetry between market facing parts of procurement and sales are not intuitive. However, APS extend the perspective on business applications extending the classical tasks of ERP and transactional systems to a management and planning level. With APS implemented in multiple industries and validated specifically in the process industry (Schaub/Zeier 2003) or also for Small and Medium Enterprises (SME) (Friedrich 2000), importance will further grow. 

All concepts can be related to the supply chain planning matrix most of them are a re-branded description of short-term and operative supply chain planning problems. Concluding, SCM reached the highest level of crossfunctional and cross-company orientation of management concepts in the value chain with the emphasis on supply. 

The Supply Chain Operations Reference (SCOR ) model is a reference model for supply chain planning and operations processes as well as performance management developed by the cross-industry organization Supply Chain Council (SCC) started in 1996 (Supply Chain Council 2006 reviewed by Siirie/Wagner 2004, pp. 41-49). The SCOR model structures... 

Additionally, the physical maximum inventory determined by physical storage capacity should be applied in exceptional months specifically for the first planning month if actual inventories to be considered in the plan are higher than the maximum bandwidth inventory. Minimum and maximum inventory boundaries are regular components in standard supply chain planning models (see for example Chen et al. 2003, p. 1881). 

Gupta A, Maranas CD (2003) Managing demand uncertainty in supply chain planning. Computers Chemical Engineering 27 (8-9) 1219-1227... 

Kurus D (2006) Simulation-based optimization model for supply chain planning of commodities in the chemical industry Technical University of Berlin Lababidi HMS, Ahmed MA, Alatiqi IM, Al-Enzi AF (2004) Optimizing the Supply Chain of a Petrochemical Company under Uncertain Operating and Economic Conditions. Industrial Engineering Chemistry Research 43 63-73 Labys WC (1973) Dynamic Commodity Models Specification, Estimation and Simulation, Lexington Books, Lexington... 

Meyr H (2004a) Supply chain planning in the German automotive industry. OR Spectrum 26 447-470... 

Miller T (2002) Hierarchical Operations and Supply Chain Planning. Springer, London et al. 

Rohde J, Meyr H, Wagner M (2000) The Supply Chain Planning Matrix. PPS-Management 5(1) 10-15... 

Scharlacken JW, Harland D (1997) Global Supply Chain Planning Synchronizing Operations and Logistics with the Pulse of the International Marketplace. 40th APICS International Conference Proceedings 211-219... 

Lasschuit, W. and Thijssen, N. (2003) Supporting supply chain planning and scheduling decisions in the oil chemical industry, in Proceedings of Fourth International Conference on Foundations of Computer-Aided Process Operations (eds I.E. Grossmann and C.M. McDonald), Coral Springs, CAChE, p. 37. 

Melo et al. (2005) propose a multi-period, deterministic, multiple-product MILP model for strategic supply chain planning. The model does not impose any restrictions on the number and type of facilities and the transportation links between facilities. The basic model explicitly covers relocation of capacity to new facilities. It can be extended to include capacity expansions and reductions. To this end, two fictitious, non-selectable facilities are introduced that provide additional or absorb excessive capacities. Capacity is assumed to be adjustable on a continuous scale but an extension to modular capacity is also provided. The model is very... 

Melo MT, Nickel S, Saldanha da Gama F (2005) Dynamic multi-commodity capacitated facility location a mathematical modeling framework for strategic supply chain planning. Computers Operations Research 33 181-208... 

Gupta A., Maranas C.D. and McDonald C.M. 2000. Midterm supply chain planning under demand uncertainty customer demand satisfaction and inventory management, Comput. Chem. Eng., 24, 2613-2621. 

Supply Chain Execution 338 Supply Chain Planning 338 Manufacturing Execution 338... 

Figure 2 Intraenterpiise View of Supply Chain Planning Hierarchy.

Supply chain planning at the operational level is, in essence, supply scheduling that occurs on a facUity-by-facihty basis. As such, separate but coordinated schedules are generated for plants, warehouses, distribution centers, and vehicle systems. Planning at this level differs from tactical and strategic levels in that demand actually exists—that is, orders have been placed. These orders need to be scheduled based on the immediate state of resources (i.e., materials, equipment, and labor). The diverse nature of facilities means that the specifics of optimization vary widely at this level, but the objective typically is to maximize throughput in a given facility. 

Individually, these layers serve to separate concerns and enable the definition of tractable planning problems for which mathematical and managerial solutions can be obtained. Collectively, these layers of supply chain planning enable manufacturing enterprises more effectively and efficiently to balance supply, resources, and demand. The upper layers buffer the lower layers from sudden shifts in the market, thus allowing for smoother changes in the enterprise s plants, distribution channels, and transportation systems. 

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