The impacts of Radio Frequency Identification (RFID) technology on supply chain costs

Radio Frequency Identification (RFID) is regarded as a promising technology for the optimization of supply chain processes since it improves manufacturing and retail operations from forecasting demand to planning, managing inventory, and distribution. This study uses a simulation model to calculate the expected benefits of an integrated RFID system on a three-echelon supply chain obtained through performance increases in efficiency, accuracy, visibility, and security level. The study investigates how the product value, lead time, and demand uncertainty affect the performance of the integrated RFID supply chain in terms of cost factors at the echelon level.     

A supply chain model of vendor managed inventory

This research evaluates how vendor managed inventory (VMI) affects a supply channel. Specifically, VMI always leads to a higher buyer's profit, but supplier's profit varies. In the short-term, VMI is found to reduce total costs of the channel system, but under certain cost conditions between buyer and supplier, it could decrease the purchasing price and supplier's profit. In the long-run, it could more likely increase supplier's profit than in the short-run. Finally, VMI is an effective supply chain strategy that can realize many of the benefits obtainable only in a fully integrated supply chain.     

Incorporating inventory control decisions into a strategic distribution network design model with stochastic demand

In this paper, we propose a simultaneous approach to incorporate inventory control decisions––such as economic order quantity and safety stock decisions––into typical facility location models, which are used to solve the distribution network design problem. A simultaneous model is developed considering a stochastic demand, modeling also the risk pooling phenomenon. We present a non-linear-mixed-integer model and a heuristic solution approach, based on Lagrangian relaxation and the sub-gradient method. In a numerical application, we found that the potential cost reduction, compared to the traditional approach, increases when the holding costs and/or the variability of demand are higher.     

The impact of transportation disruptions on supply chain performance

This paper investigates the effect of a transportation disruption on supply chain performance using system dynamics simulation, comparing a traditional supply chain and a vendor managed inventory system (VMI) when a transportation disruption occurs between 2 echelons in a 5-echelon supply chain. The greatest impact occurs when transportation is disrupted between the tier 1 supplier and warehouse. In the traditional structure the retailer, warehouse, and tier 1 supplier experience the greatest inventory fluctuations and the highest goods in transit to their facilities. These impacts are less severe for the VMI structure, although unfilled orders are approximately the same for each.     

Design and planning for green global supply chains under periodic review replenishment policies

We quantify the impact of jointly optimizing strategic network design and tactical inventory planning on the cost and CO₂ emissions of multi-echelon logistics networks. The obtained insights indicate that longer optimized replenishment cycles reduce a node’s transportation cost and CO₂ emissions but increase its inventory costs. Moreover, under a fixed replenishment cycle, a node’s service level increases when supplied by a satellite warehouse. Finally: (i) the costs of implementing optimal green network design decisions could be misleading if inventory planning is neglected, (ii) greening of supply chains could become expensive, (iii) current legislative CO₂ ton prices hardly influence logistics networks.     

Dual sourced supply chains: the discount supplier option

In this paper, we examine the dynamics of a supply chain that has the option of using two suppliers – one reliable, and the other unreliable. We characterize the unreliable supplier with long lead-time mean and variance. Although the use of the unreliable supplier might potentially warrant higher inventory and transportation costs, it is attractive because of the willingness of the supplier to provide a discount on the purchase price. We analyze the cost economics of two suppliers in a broader inventory-logistics framework, one that includes in-transit inventories and transportation costs. In this broader perspective, we provide a simple heuristic and sample exchange curves to determine: (i) if the order should be split between the suppliers; and (ii) if the order is split, the amount of discount and the fraction ordered to the secondary supplier to make order-splitting a worth-while policy. ©     

Comparing strategies for addressing delivery shortages in stochastic demand settings

In logistics networks involving one supply point (depot) and several geographically dispersed demand points (e.g., retail stores), delivery shortages will result if the design of delivery routes ignores random period-to-period fluctuations in customer demands. Delivery shortages may be costly enough for the depot to seek strategies to prevent them. A requirement for rational comparison of strategies is quantifying their effects on total supply chain costs. Accurate distance prediction models are developed to help satisfy this prerequisite for the transportation cost element. These models are integrated into a comparison of strategies on the basis of how these strategies affect inventory and transportation. The focus of findings from the comparison involves identifying the information cost thresholds for accepting/rejecting a demand-responsive strategy. The study's implications for choosing a strategy are presented. ©     

Optimizing inventory decisions in a multi-stage multi-customer supply chain

Most supply chain models focus on two-stage chains in which vendors supply material to one customer. In this paper, we formulate a three-stage supply chain model where a firm can supply many customers. We deal with three inventory coordination mechanisms between chain members and solve a cost minimization model for each. We show that some of the coordination mechanisms can result in a significantly lower total cost than matching production and delivery along the chain. We provide some insights into when the added complexity of the second and third coordination mechanisms lead to significant cost reductions.     

The lead-time reliability paradox and inconsistent value-of-reliability estimates

The value-of-reliability (VOR) reflects the savings in inventory-system costs from more reliable (less variable) lead times. Previous studies have revealed that more reliable, but positively skewed, lead times could actually increase optimal safety inventory when the probability of satisfying all demand during a replenishment cycle drops below 70%. Researchers claim that this paradox affects most firms and that it explains the inconsistent VOR estimates found in the transportation economics literature. Our investigation reveals that firms interested in high product availability may safely ignore the paradox and that less lead-time variability consistently increases VOR, the paradox notwithstanding.     

A quality function deployment approach to improve maritime supply chain resilience

Being international and involving numerous organizations as the basic nature, maritime supply chains are exposed to various natural and man-made risks. This paper aims to develop an original quality function deployment approach to enhance maritime supply chain resilience, taking both customer requirements and maritime risks into consideration. The empirical analysis is carried out through in-depth studies of three major shipping lines and their respective major shippers. The top three resilience measures are contingency plan, monitoring and maintenance, and supply chain relationship management. The study also unveils the relatively low visibility and integration in maritime supply chains.     

COVID-19 pandemic and prospects for recovery of the global aviation industry

The COVID-19 pandemic ushered a wave of economic decline across the world due to disruptions in the supply and demand chain for the travel market. This study examines potential recovery pathways from the global aviation industry following the severe negative impacts of the COVID-19 pandemic. Using archival and secondary data mainly from Flightradar24, ICAO, IATA and EUROCONTROL, the study found that the pandemic inflicted a heavy toll on global aviation, which resulted in ratings downgrades, liquidation and bankruptcy of several airlines and airports due to severe cash burn instigated by travel restrictions. Although the industry is opening up, the recovery process seems much slower than anticipated, which could see more jobs and airlines failing in the absence of relevant support. The study recommends that as the sector opens up, it does so in a responsible manner, which puts measures that protect travellers, reduce costs, increase efficiency, and ensure a quality customer experience anchored on employees' health and customer safety. Recovery should also occur with the view to build back better in line with the provisions of the Sendai Framework for Disaster Risk Reduction and at the same time responding to the dictates of Agenda 2030 on sustainable development goals (SDGs).     

Supply chain integration,landside operations and port accessibility in metropolitan Chicago

Seaports have traditionally been the focus of maritime logistics supply chains. Changing production patterns demanding greater end to end visibility by customers and accessibility to key inland population centers assume greater importance in the organization and design of transport resources and cargo flows. While synchronization of all aspects of the supply chain has become an operational necessity for firms, it is often held hostage to the efficiency of hinterland networks who must respond to a large group of stakeholders with sporadic coordination. This is particularly true when looking at the central US city and region of Chicago, a critical intermodal exchange point for truck, air and river barge traffic domestic and global, as well as a major central distribution location. This paper analyzes supply chain integration (SCI) efforts in the metropolitan Chicago region and considers efforts by public and private actors to collaborate for region-wide SCI improvements. Pareto analysis suggests that concentrated freight corridors exist, influencing freight planning for regional transportation networks more directly than diffused regional freight movements. If the corridor service becomes less responsive or congested the corridor will move to different end nodes within the broad region. Regional planning must thus address national, regional, and local moves. Private/public sector infrastructure firms should address functional cooperation on SCI by focusing on corridors as well as local improvements.     

A supply chain network design considering transportation cost discounts

This study addresses an integrated facility location and inventory allocation problem considering transportation cost discounts. Specifically, this article considers two types of transportation discounts simultaneously: quantity discounts for inbound transportation cost and distance discounts for outbound transportation cost. This study uses an approximation procedure to simplify DC distance calculation details, and develops an algorithm to solve the aforementioned supply chain management (SCM) problems using nonlinear optimization techniques. Numerical studies illustrate the solution procedures and the effects of the model parameters on the SCM decisions and total costs. Results of this study serve as a reference for business managers and administrators.     

Informal transport: A global perspective

Informal transport services—paratransit-type services provided without official sanction—can often be difficult to rationalize from a public policy perspective. While these systems provide benefits including on-demand mobility for the transit-dependent, jobs for low-skilled workers, and service coverage in areas devoid of formal transit supply, they also have costs, such as increased traffic congestion, air and noise pollution, and traffic accidents. This article reviews the range of informal sector experiences worldwide, discusses the costs and benefits of the sector in general and uses several case studies to illustrate different policy approaches to regulating them.     

A robust inventory routing policy under inventory inaccuracy and replenishment lead-time

In this paper, we study an inventory routing problem under replenishment lead-time and inventory inaccuracy, which exist extensively in distribution systems for fresh products, but are often ignored in existing research. To solve the problem, a robust inventory routing policy is developed in three steps. At first, we propose the methods of updating the probability of the current net inventory and predicting those in future periods. For each candidate route, we develop a Robust TQL Algorithm to optimize the replenishment time, replenishment quantity and replenishment stage length. Finally, a genetic algorithm-based method is developed to optimize the delivery route.     

Global supply chain design: A literature review and critique

In this paper, we review decision support models for the design of global supply chains, and assess the fit between the research literature in this area and the practical issues of global supply chain design. The classification scheme for this review is based on ongoing and emerging issues in global supply chain management and includes review dimensions for (1) decisions addressed in the model, (2) performance metrics, (3) the degree to which the model supports integrated decision processes, and (4) globalization considerations. We conclude that although most models resolve a difficult feature associated with globalization, few models address the practical global supply chain design problem in its entirety. We close the paper with recommendations for future research in global supply chain modeling that is both forward-looking and practically oriented.     

Analytical models of rail transportation service in the grain supply chain: Deconstructing the operational and economic advantages of shuttle train service

This paper introduces conceptual and mathematical models of the domestic grain supply chain incorporating trucking, elevator storage, and rail transportation. We compare conventional rail service supported by country elevators with shuttle service supported by terminal elevators across three critical transportation service dimensions: travel time, cost, and capacity. Even after taking into account trucking and elevator storage, the time and cost model results indicate that shuttle service transports grain faster and reduces logistical supply chain costs, respectively, relative to conventional service. The rail capacity model results demonstrate that shifting grain from conventional to shuttle service significantly increases rail capacity.     

Integration of inventory and transportation decisions in a logistics system

This paper addresses some of the challenges faced by a company which is responsible for delivering coal to its four subsidiaries situated along a river, through river hired or self-owned vessels. We propose to adopt a vendor managed inventory concept that involves establishment of a central warehouse at the port, and apply the Markov Decision Process (MDP) to formulate both ordering and delivery problems, considering different transportation modes, costs, and inventory issues. An efficient algorithm is developed for solving the MDP models. Our computational tests show that the proposed strategy can significantly reduce the overall system costs while maintaining smooth Just-in-Time supplies of coal to the subsidiaries.     

Consolidation effects: Whether and how inventories should be pooled

This paper presents a framework for deciding whether and how inventories should be pooled, using the consolidation effect as a cornerstone tool to measure inventory costs, service levels, and total costs. Based on the random generation of different scenarios, it is indicated the adequacy of inventory centralization, regular transshipments, and independent systems to a given set of demand, lead time, and holding costs characteristics. Sensitivity analyses on mathematical expressions are performed to determine when one alternative is preferable in terms of total costs. Real settings are also presented in light of the framework developed.     

Reprint of “Green supply chain decisions – Case-based performance analysis from the food industry”

Environmental impacts, such as GHC emissions, have been introduced to supply chain management as an additional parameter to traditional cost, lead-time and on-time delivery. Supply chain management represents a significant source of decisions affecting the eco-efficiency of many products. This paper analyses cases from the food industry, mainly order-picking, transportation, warehousing, and distribution aspects from the greening point of view. Three case examples of decisions in supply chain design in the food industry are considered. The results show dependencies between performance measures. Finally, a framework of decisions and their impact on performance is presented.