Table Of Content
Establishing a baseline involves gathering and analyzing data related to various aspects of the supply chain, such as demand patterns, transportation costs, lead times, and inventory levels. This data forms the foundation for accurate modeling and simulation of the supply chain network. With a baseline in place, businesses can compare different supply chain scenarios and assess the impact of proposed changes. The most effective capability-building programs we have seen develop an integrated set of functional, technical, and leadership skills, linking learning to existing business initiatives and capability profiles. For example, the most frequently-implemented supply-chain transformation initiatives involve advanced analytics—ranging from network modelling and risk analytics to planning optimization and integrated decision-making. Traditional supply-chain skills involving network design and optimization, demand and supply planning, and inventory management are all needed to drive operating performance impact from such initiatives.
Deterministic Analytical Models
Establish the relative importance of each criterion through discussion and brainstorming. The total sum of the weighting scores must equal to 100, thus the scores will conveniently represent the proportion of the weight in term of percentage. We’ll send you thought leadership, compelling content and product updates. The authors conclude that their approximation is acceptable as long as the P(backorder) does not exceed 0.30, in which cases the system is failing to effectively accommodate demand volumes.
Creating Effective Compliance Training
Also, we will shed light on the best practices in this field, emphasizing how advanced analytics, optimization technologies, and sustainability considerations are reshaping the way businesses approach their supply chain networks. Milena’s current research focuses on the design of supply chain networks. Her work focuses on improving decision-making in supply chain design through the use of data-driven optimization and simulation models and their integration into interactive visual tools.
How Transparent Should You Be With Your Supply Chain Network?
Considering the significant changes, we have witnessed in recent years, companies are expanding their focus to include a broader set of metrics, such as the following. This white paper is the fruit of a collaboration between the Massachusetts Institute of Technology’s Center for Transportation & Logistics (MIT CTL) and Coupa, the provider of artificial intelligence (AI)-powered supply chain analytics software. For more in-depth exploration of these topics, see McKinsey’s Operations insights collection. Learn more about manufacturing and supply chain consulting, and check out supply-chain-related job opportunities if you’re interested in working at McKinsey. Attendees can also look forward to exclusive panel discussions, fireside chats, keynote speakers, and more. In-person executive workshops offer limited slots, making early attendance a must.
The review is essential because the changing business environment could easily make the originally right decision no longer justifiable. When the capital or financial circumstance changes like the one in the economic downturn, the outsourcing decision may have to be revised accordingly. Internal development of technologies and technical competences could also affect outsourcing decisions. Outsourcing is relatively simple to understand as a concept but is difficult to implement in practice.
In response, a wave of orders moves through the chain, growing larger at each stage. Eventually, factory production surges and inventories throughout the supply chain start to rise. One can imagine a supply chain as a piece of water pipe with different diameters at different sections. The overall flow of the pipe, which represents the total capacity of the supply chain, depends on the smallest diameter section. In the situation of networked tiered supply chain structure, the overall capacity of the supply chain becomes the double-layered minimum. For each tier i the overall capacity is, and the whole supply chain’s capacity becomes.
The authors obtain steady-state approximations for the average inventory level and the average number of outstanding backorders at each location for any choice of base stock level. Finally, using these approximations, the authors propose the construction of an optimization model that determines the minimum-cost base stock level. Yet, procurement and supply chain teams often learn about such important product details too late, only when they are asked to procure the materials. Customer preferences are an important indicator of growing market trends and must be rapidly accounted for in product design through the supply chain. With increased distance and distribution between supply chain partners and their functions, DfSC is difficult to implement in product design.
An additional design tip to improve inventory levels is to reconfigure components for alternate use. A small inventory saves money for the company in areas such as maintenance, storage and shipping. It also increases flexibility while reducing waste and obsolescence risk. Product development teams must also consider the impact of any design changes on storage and transportation. Sudden, drastic changes that involve heavier components can create part scarcity and freight costs. To prevent such an occurrence, the company must give the part suppliers sufficient lead times and demand forecasts well in advance.
Building the Supply Chain of the Future BCG - BCG
Building the Supply Chain of the Future BCG.
Posted: Mon, 10 Jul 2023 07:00:00 GMT [source]
To illustrate the bullwhip effect in the supply chain dynamics, MIT Sloan School of Management created a so-called Beer Distribution Game or just Beer Game. The Beer Game is the most widely played game in business schools around the world. Many modified versions have also been developed and used extensively, but the one shown in this book is the original version. Despite the variation of the games played around the world, the key features and the learning points remain largely the same.
One of the most severe economic problems caused by the COVID-19 pandemic was damage to the supply chain. The magnitude of the alteration and fluctuation increases as it travels to the upstream end of the supply chain. The cycle of peaks and troughs of one stage also tends to lag behind the one in the previous stage.
This means he has plenty of time to find a manufacturing partner to cover all the necessary requirements for the project at hand. Thus, we list out different DfSC strategies to bear in mind in the product design phase that will influence the supply chain. In each of these categories, the designers add features and capabilities that improve the final product with respect to a certain attribute, such as the ease of manufacturing, assembly, etc. Run scenarios to evaluate the impact of incorporating sustainability initiatives into the supply chain. This could involve assessing the environmental footprint, using eco-friendly transportation methods, or adopting sustainable sourcing practices. Learn how to design and optimize the physical, financial, and information flows of a supply chain to enhance business performance – part of the MITx MicroMasters Credential in Supply Chain Management.
This is suitable for companies with periods of high demand and low demand. Companies making stationary articles are best for this supply chain design as they have high demand when the schools reopen and then a steady but slow demand during the other months. They can manage this by having diversified suppliers who work on short-period contracts. Having proper algorithms for managing inventory will help them produce only goods that will be sold in low-demand periods.
Above all the structure of the supply chain is visible to all, which is rarely the case in real life. Players can readily inspect the board to see how much inventory is in the transit or held by their teammates. The game is typically played with a very simple pattern of customer demand.
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