Supplying Product in the Chicago School System

Eisenstein and Iyer [33] provide a description of a project to improve supply availability in the Chicago Public School System. The supply chain consisted of a warehouse that supplied products to 600 public schools. The products included engineering and educational supplies. Engineering supplies, also called Class A, included toilet paper, paper towels, rock salt, and so on, and accounted for about 50% of dollar value of the warehouse shipments but 1% of the items and 70% of the shipment volume. Educational supplies, also called Class B, accounted for 99% of the items, 50% of the dollar volume, and 30% of the physical volume. In the original system, all items shared a common truck capacity to minimize waste shipment space. Each school had a scheduled delivery once every two weeks. 

The project [33] describes a new system in which truck capacity was split so that deliveries of engineering goods, whose demands were predictable, were done once every two weeks. However, delivery of hard-to-predict educational supplies was done overnight, via the school s internal mail system. This synchronization of delivery lead times to part demand characteristics improved system performance. The reorganized system observed faster delivery without any increase in truck capacity and reduced costs by over 150,000 per year. 

Notice that the new system replaced the single supply chain with two separate supply chains, each with its own product and delivery characteristics. In Chapter 4 on capacity, we described conditions when splitting capacity may improve the system. In the same chapter, we also discussed 

Graves and Willems [48] provide an example of a network model to determine safety stocks in a supply chain at Eastman Kodak. The supply chain involves a high-end digital camera in which the camera, procured from an outside vendor, came with lens, shutter, and focus functions. The imager, circuit board assembly, and many other parts were assembled and tested. The final product was then moved to a distribution center and shipped against demands. The parts in the camera were classified into two groups, one with a lead time of under 60 days and the other set with a lead time of over 60 days. 

Narus and Anderson [90] describe a study of Volvo GM Heavy Truck Corporation and its dealers. An important source of revenue for Volvo GM is its sales of repair parts for its commercial trucks. However, in the mid 1990s, dealers reported high stockout rates even though inventory levels of spare parts were rising. Dealers complained that lack of consistent service was causing lost business as customers replaced Volvo parts with generics. 

---