Handling of Uncertainty in Life Cycle Inventory by Correlated Multivariate Lognormal Distributions: Application to the Design of Supply Chain Networks

Poster presented in the 24th European Symposium on Computer Aided Process Engineering (ESCAPE 24), Budapest, Hungary, June 15-18, 2014.

Handling of Uncertainty in Life Cycle Inventory by Correlated Multivariate Lognormal Distributions: Application to the Design of Supply Chain Networks

In this work, we analyze the effect of incorporating life cycle inventory (LCI) uncertainty on the multi-objective optimization of chemical supply chains (SC) considering simultaneously their economic and environmental performance. To this end, we present a stochastic multi-scenario mixed-integer linear programming (MILP) coupled with a two-step transformation scenario generation algorithm with the unique feature of providing scenarios where the LCI random variables are correlated and each one of them has the desired lognormal marginal distribution. The environmental performance is quantified following life cycle assessment (LCA) principles, which are represented in the model formulation through standard algebraic equations. The capabilities of our approach are illustrated through a case study of a petrochemical supply chain. We show that the stochastic solution improves the economic performance of the SC in comparison with the deterministic one at any level of the environmental impact, and moreover the correlation among environmental burdens provides more realistic scenarios for the decision making process.

The Function and Consequences of Alternative Fresh Produce Supply Chain Models

Around the world, consumers and retailers of fresh produce are becoming more and more discerning about factors such as food safety and traceability, health, convenience and the sustainability of production systems, and in doing so they are changing the way in which fresh produce supply chains are configured and managed. When consumers demand fresh, safe, convenient, value-for-money produce, retailers in an increasingly competitive environment are attracted to those business models most capable of meeting these demands profitably. Traditional models are proving less and less able to deliver competitive advantage in such an environment. As a result, opportunistic, adversarial, price-based approaches to doing business between chain members are being replaced by approaches that are more strategic, collaborative and value-based. The shaping force behind this change is the need for producers, wholesalers, category managers, retailers and consumers to have more certainty about the performance of the supply chains upon which they rely. Certainty is generated through the supply chain's ability to create, deliver and share value. How to build supply chains that create, deliver and share value is arguably the single biggest challenge to the competitiveness of fresh produce firms, and therefore to the industries to which they belong.

The impact of supply chain performance measurement systems on dynamic behaviour in supply chains

The amplification of demand variation up a supply chain widely termed ‘the Bullwhip Effect’ is disruptive, costly and something that supply chain management generally seeks to minimise. Originally attributed to poor system design; deficiencies in policies, organisation structure and delays in material and information flow all lead to sub-optimal reorder point calculation. It has since been attributed to exogenous random factors such as: uncertainties in demand, supply and distribution lead time but these causes are not exclusive as academic and operational studies since have shown that orders and/or inventories can exhibit significant variability even if customer demand and lead time are deterministic. This increase in the range of possible causes of dynamic behaviour indicates that our understanding of the phenomenon is far from complete. One possible, yet previously unexplored, factor that may influence dynamic behaviour in supply chains is the application and operation of supply chain performance measures. Organisations monitoring and responding to their adopted key performance metrics will make operational changes and this action may influence the level of dynamics within the supply chain, possibly degrading the performance of the very system they were intended to measure. In order to explore this a plausible abstraction of the operational responses to the Supply Chain Council’s SCOR® (Supply Chain Operations Reference) model was incorporated into a classic Beer Game distribution representation, using the dynamic discrete event simulation software Simul8. During the simulation the five SCOR Supply Chain Performance Attributes: Reliability, Responsiveness, Flexibility, Cost and Utilisation were continuously monitored and compared to established targets. Operational adjustments to the; reorder point, transportation modes and production capacity (where appropriate) for three independent supply chain roles were made and the degree of dynamic behaviour in the Supply Chain measured, using the ratio of the standard deviation of upstream demand relative to the standard deviation of the downstream demand. Factors employed to build the detailed model include: variable retail demand, order transmission, transportation delays, production delays, capacity constraints demand multipliers and demand averaging periods. Five dimensions of supply chain performance were monitored independently in three autonomous supply chain roles and operational settings adjusted accordingly. Uniqueness of this research stems from the application of the five SCOR performance attributes with modelled operational responses in a dynamic discrete event simulation model. This project makes its primary contribution to knowledge by measuring the impact, on supply chain dynamics, of applying a representative performance measurement system.

An empirical study of the imperatives for a supply chain implementation project in Seagate Technology International

Singapore's electronics manufacturers are facing many questions. In the computer hard-drive industry, where the problem of obsolescence is common and where a product's lifecycle may be only six months, manufacturers are anxious to know what the next order-winning criteria will be. Since low labour costs are no longer a key factor, many organisations are developing their competencies in research and development, sales and marketing, logistics and supply chain management in order to maintain competitiveness. This paper illustrates how Seagate has envisaged a climate of cooperation and collaboration to better serve its customers in the areas of technology, cost and delivery. The paper is based on observations and findings following a longitudinal case study approach at the Seagate Storage Product Group (SPG) in Singapore. The seven-stage implementation framework adopted by Seagate in their SCM project is discussed, together with the process of how Seagate has created a paradigm shift towards a new culture of teamwork-based collaboration.

Optimization of facility location-allocation problem in customer-driven supply chain

This paper develops and applies an integrated multiple criteria decision making approach to optimize the facility location-allocation problem in the contemporary customer-driven supply chain. Unlike the traditional optimization techniques, the proposed approach, combining the analytic hierarchy process (AHP) and the goal programming (GP) model, considers both quantitative and qualitative factors, and also aims at maximizing the benefits of deliverer and customers. In the integrated approach, the AHP is used first to determine the relative importance weightings or priorities of alternative locations with respect to both deliverer oriented and customer oriented criteria. Then, the GP model, incorporating the constraints of system, resource, and AHP priority is formulated to select the best locations for setting up the warehouses without exceeding the limited available resources. In this paper, a real case study is used to demonstrate how the integrated approach can be applied to deal with the facility location-allocation problem, and it is proved that the integrated approach outperforms the traditional costbased approach.

Optimizing supply chain waste management through the use of RFID technology

This paper presents a Decision Support System framework based on Constrain Logic Programming and offers suggestions for using RFID technology to improve several of the critical procedures involved. This paper suggests that a widely distributed and semi-structured network of waste producing and waste collecting/processing enterprises can improve their planning both by the proposed Decision Support System, but also by implementing RFID technology to update and validate information in a continuous manner. © 2010 IEEE.

Managing the impact on biodiversity of supply chain companies

Industrial development has had a major role in creating the situation where bio-diverse materials and services essential for sustaining business are under threat. A key contributory factor to biodiversity decline comes from the cumulative impacts of extended supply chain business operations. In order to contribute to stopping this decline, the industrial world needs to form a better understanding of the way it utilizes the business and biodiversity agenda in its wider operations. This thesis investigates the perceptions and attitudes to biodiversity from government, society and a wide cross-section of industry. The research includes the extent of corporate attention to and use of environmental business tools and guidelines in reporting on biodiversity issues. A case study of three companies from different industrial sectors is undertaken to observe procurement and related environmental management of their supply chains. The use of accredited and non-accredited environmental management systems (EMS) are analysed as frameworks for introducing biodiversity aspects into supply chain management. The outcome is a methodology, which can be used either as a bespoke in-house biodiversity management system or within an accredited ISO 14001 EMS, for incorporating the assessment and management of the potential risks and opportunities involving environmental impacts on biodiversity of supply chain companies.

Corporate responsibility reporting of biodiversity in the supply chain

Industrial development, accompanying human population growth, has had a major role in creating the situation where bio-diverse materials and services essential for sustaining business are under threat. A major contributory factor to biodiversity decline comes from the cumulative impacts of extended supply chain business operations. However, within Corporate Responsibility (CR) reporting impacts on biodiversity due to supply chain operations have not traditionally been given equal weighting with other environmental issues. This paper investigates the extent of CR reporting in managing and publicising company biodiversity supply chain issues by reviewing a cross-sector sample of publicly available CR reports. The report contents were examined for suggestions of industrial sectorial trends in the level of biodiversity consideration. The reporting of environmental management system use within company supply chain management is assessed in the samples and is considered as a mechanism for responsible supplier partnership working.

Theoretical perspectives in purchasing and supply chain management:an analysis of the literature

Purpose – This paper attempts to seek answers to four questions. Two of these questions have been borrowed (but adapted) from the work of Defee et al.: RQ1. To what extent is theory used in purchasing and supply chain management (P&SCM) research? RQ2. What are the prevalent theories to be found in P&SCM research? Following on from these questions an additional question is posed: RQ3. Are theory-based papers more highly cited than papers with no theoretical foundation? Finally, drawing on the work of Harland et al., the authors have added a fourth question: RQ4. To what extent does P&SCM meet the tests of coherence, breadth and depth, and quality necessary to make it a scientific discipline? Design/methodology/approach – A systematic literature review was conducted in accordance with the model outlined by Tranfield et al. for three journals within the field of “purchasing and supply chain management”. In total 1,113 articles were reviewed. In addition a citation analysis was completed covering 806 articles in total. Findings – The headline features from the results suggest that nearly a decade-and-a-half on from its development, the field still lacks coherence. There is the absence of theory in much of the work and although theory-based articles achieved on average a higher number of citations than non-theoretical papers, there is no obvious contender as an emergent paradigm for the discipline. Furthermore, it is evident that P&SCM does not meet Fabian's test necessary to make it a scientific discipline and is still some way from being a normal science. Research limitations/implications – This study would have benefited from the analysis of further journals, however the analysis of 1,113 articles from three leading journals in the field of P&SCM was deemed sufficient in scope. In addition, a further significant line of enquiry to follow is the rigour vs relevance debate. Practical implications – This article is of interest to both an academic and practitioner audience as it highlights the use theories in P&SCM. Furthermore, this article raises a number of important questions. Should research in this area draw more heavily on theory and if so which theories are appropriate? Social implications – The broader social implications relate to the discussion of how a scientific discipline develops and builds on the work of Fabian and Amundson. Originality/value – The data set for this study is significant and builds on a number of previous literature reviews. This review is both greater in scope than previous reviews and is broader in its subject focus. In addition, the citation analysis (not previously conducted in any of the reviews) and statistical test highlights that theory-based articles are more highly cited than non-theoretically based papers. This could indicate that researchers are attempting to build on one another's work.

Green supply chain performance measurement using the analytic hierarchy process:a comparative analysis of manufacturing organisations

The main purpose of this research is to develop and deploy an analytical framework for measuring the environmental performance of manufacturing supply chains. This work's theoretical bases combine and reconcile three major areas: supply chain management, environmental management and performance measurement. Researchers have suggested many empirical criteria for green supply chain (GSC) performance measurement and proposed both qualitative and quantitative frameworks. However, these are mainly operational in nature and specific to the focal company. This research develops an innovative GSC performance measurement framework by integrating supply chain processes (supplier relationship management, internal supply chain management and customer relationship management) with organisational decision levels (both strategic and operational). Environmental planning, environmental auditing, management commitment, environmental performance, economic performance and operational performance are the key level constructs. The proposed framework is then applied to three selected manufacturing organisations in the UK. Their GSC performance is measured and benchmarked by using the analytic hierarchy process (AHP), a multiple-attribute decision-making technique. The AHP-based framework offers an effective way to measure and benchmark organisations’ GSC performance. This study has both theoretical and practical implications. Theoretically it contributes holistic constructs for designing a GSC and managing it for sustainability; and practically it helps industry practitioners to measure and improve the environmental performance of their supply chain. © 2013 Copyright Taylor and Francis Group, LLC. CORRIGENDUM DOI 10.1080/09537287.2012.751186 In the article ‘Green supply chain performance measurement using the analytic hierarchy process: a comparative analysis of manufacturing organisations’ by Prasanta Kumar Dey and Walid Cheffi, Production Planning & Control, 10.1080/09537287.2012.666859, a third author is added which was not included in the paper as it originally appeared. The third author is Breno Nunes.

Selection of simulation tools for improving supply chain performance

Simulation is an effective method for improving supply chain performance. However, there is limited advice available to assist practitioners in selecting the most appropriate method for a given problem. Much of the advice that does exist relies on custom and practice rather than a rigorous conceptual or empirical analysis. An analysis of the different modelling techniques applied in the supply chain domain was conducted, and the three main approaches to simulation used were identified; these are System Dynamics (SD), Discrete Event Simulation (DES) and Agent Based Modelling (ABM). This research has examined these approaches in two stages. Firstly, a first principles analysis was carried out in order to challenge the received wisdom about their strengths and weaknesses and a series of propositions were developed from this initial analysis. The second stage was to use the case study approach to test these propositions and to provide further empirical evidence to support their comparison. The contributions of this research are both in terms of knowledge and practice. In terms of knowledge, this research is the first holistic cross paradigm comparison of the three main approaches in the supply chain domain. Case studies have involved building ‘back to back’ models of the same supply chain problem using SD and a discrete approach (either DES or ABM). This has led to contributions concerning the limitations of applying SD to operational problem types. SD has also been found to have risks when applied to strategic and policy problems. Discrete methods have been found to have potential for exploring strategic problem types. It has been found that discrete simulation methods can model material and information feedback successfully. Further insights have been gained into the relationship between modelling purpose and modelling approach. In terms of practice, the findings have been summarised in the form of a framework linking modelling purpose, problem characteristics and simulation approach.