Showing posts with label Supply Chain Management (SCM). Show all posts
Showing posts with label Supply Chain Management (SCM). Show all posts

Monday, August 12, 2013

Value chain trumps good design - ColaLife

Babies in Africa suffer and die from diarrhoea, but it's easily treatable with medicines that costs pennies. The problem is getting the medicine into the mothers hands - a supply chain problem in a rural and sparsely populated area.

Here comes ColaLife: Turning profits into healthy babies.

Inventing medicine packaging to fit into coca cola bottle gaps is ingenious, but understanding the value chain, so that all hands that touch the supply chain of the medicine has an incentive to ensure its stock and flow, is even more important.

If there is only one message to take away, I would choose:
"What's in it for me?" 
Always ask this to make sure there is a hard incentive for all players to participate. Free give-aways are often not valued, resulting in poorly managed resources and relatively low success rate. Ample training and advertising for awareness and effective usage is also key for product / technology adoption.

Tuesday, October 14, 2008

Similarity between “A Single EU Sky” and “Ford Suppliers”? Optimization

How should EUROCONTROL select which improvement projects to invest in for a unified European sky for air traffic by the year 2020? Will Ford’s Automative Holding Components shut down their facilities and outsource everything? Optimization models come to the rescue, and they are big! 2 of the 6 finalists for the Daniel H. Wagner Prize for Excellence in Operations Research presented their exciting projects at INFORMS on Monday.

The air traffic is getting more and more congested in Europe, and a solution is needed to unite the European sky with a single set of protocols for all EU countries. EUROCONTROL is in the position to do so. It is the European Organization for the Safety of Air Navigation, and it currently has 37 member states. As a part of the modernization activities, EUROCONTROL needs to select a set of technological improvement projects from four major categories: network efficiency, airport operations, sector productivity, and safety net. For example, if considering only a subset of 5 projects out of a list of 20+ projects, each with 2 to 5 implementation options, there would be 300 possible combinations. Therefore, the question is which set of projects to select that would satisfy the various objectives and constraints of multiple stakeholders, such as the airports, the airlines, the society (environment), and more. Grushka’s team from the London Business School was asked by EUROCONTROL to provide vigorous and transparent analysis of this problem by involving all stakeholders. The team used an integrative and iterative framework to approach the problem. They used a mixed integer programming model to find the optimal combination of projects. As a result of this team’s effort, the EU may now use the same language to talk about uniting the European sky with a common understanding of the problem.

The Ford team had a very different but extremely urgent problem to solve. They needed to figure out whether 2 of their automotive interior supply production facilities should be closed down and their work outsourced to other suppliers because of unprofitability and underutilization at the plants. The number one problem was time – 8 weeks was all they had. The optimization problem they faced, however, was extremely large. The mixed integer non-linear programming model (MINLP) had around 450,000 variables and 200,000 constraints. After removing nonlinearity in the model, the mixed integer programming model (MIP) had 4.3 million variables and 1.8 million constraints. Just imagine the data gathering process and the model formulation! What a nightmare. Luckily, the team had the unconditional support from the CEO and was able to obtain a complete set of data –150,000 data points in the model. After 8 weeks of 20 hour-days, the team was able to deliver a model to test out the what-if scenarios and therefore removing the subjective decision making that is so common in most enterprises. As a result, Ford will be able to maintain 1 facility and outsource only a certain percentage of the work. It presented a saving of $50 million over five years compared to the alternative of outsourcing all the work.

The two projects were fascinating to listen to. They both showcased the importance of quantitative decision making in business. It will be a tough job to select a winner out of these two. Good luck to both teams!

Credits: The talk was given at the INFORMS 2008 conference in Washington DC. The track session was MC32. Speakers are:Yael Grushka-Cockayne, London Business School, Regent’s Park, London, United Kingdom, and Erica Klampfl, Technical Leader, Ford Research & Advanced Engineering, Systems Analytics & Env. Sciences Department. The talk was titled "Daniel H. Wagner Prize Competition: Towards a Single European Sky, and Using OR to Make Urgent Sourcing Decisions in a Distressed Supplier Environment".

Friday, March 7, 2008

Supply Chain Excellence - Today's best driver of bottom-line performance

According to a recent report from Boston-based AMR Research Inc., companies that excel in supply-chain operations perform better in almost every financial measure of success. Where supply-chain excellence improves demand-forecast accuracy, companies have a 5% higher profit margin, 15% less inventory, up to 17% stronger “perfect order” ratings, and 35% shorter cash-to-cash cycle times than their peers. Companies with higher perfect-order performance have higher earnings per share, a better return on assets, and higher profit margins — roughly 1% higher for every three percentage-point improvement in perfect orders.

“The basis of competition for winning companies in today’s economy is supply-chain superiority,” says Kevin O’Marah, vice president of research at AMR Research. “These companies understand that value-chain performance translates to productivity and market-share leadership. They also understand that supply-chain leadership means more than just low costs and efficiency — it requires a superior ability to shape and respond to shifts in demand with innovative products and services.”

The above is a highlight of the supply chain importance in today's businesses, referenced from an article in BusinessWeek. Here's a link to the article.

Tuesday, February 26, 2008

Supply Chain Management concept explained in a video

This is a great video about supply chain management. Despite the dramatic effects, it's quite to the point about supply chain management.

Short and sweet, and to the point!

Supply Chain Management is "making businesses more efficient, and helping businesses create a more efficient world".

Supply Chain Management Review (SCMR)

Supply Chain Management Review - Dedicated to the art and science of moving goods to market

I stumbled upon this website today, and I really liked the tag line "Dedicated to the art and science of moving goods to market". That is what Supply Chain Management is all about.

Check it out if you've got a moment. It has all kinds of articles on SCM.