The basic information of the Supply Chain Management is
the chain relation or the link between the supplier’s supplier
and customer’s customer. More is the transparency in
partnership concept. The bondage or the link is better.
In Supply chain
coordination flow, the corporate supplier or the organizational head has
to give the total commitment on behalf of his organization to the main
customer either through the channel partners, by way of distribution
channel, group catering etc., with big total support from the consortium
of linked suppliers may be his Departmental heads in a total cost
effective and time effective manner for the result orientation in a
Global Benchmarking Strategy.
After the Business
Process Outsourcing a good number of areas has adequately improved by
the way of 3PL as the Application Service Provider/ Courier Service/
Transcription Facilities/ Tracking System etc. From the Business Process
Coordination Flow Diagram 1.1, it will be clear that there is the
continuous flow of physical supply and physical distribution of
different material, whether the net solution can be just substitute it.
Basically, the load/mode/ and the flow design in
multistage aspects gives the proper dynamics by way of
cost effectiveness as well as time effectiveness. Length
of the proximity link matters in this dynamics. There may
be a good number of failure zones to satisfy the customer
need, proper time management and the infrastructural
facilities are one of the most vital areas being hindrance
to the fulfillment of the customer satisfaction, apart
from any quality failure zone.
For supply of Raw Materials/ Packaging/ Ingredients/ MRO items it has to
be physically distributed by way of proper load, mode and flow concept.
From the Figure 1.2, it is also apparent that the product of an
organization has to match with the market whether it is in the form of
monopoly, oligopoly or competitive market. Feedback has to be taken not
only on the production quality but also on the appropriate time of the
delivery of the consignments.
The Case Study on Raw Material of semi finished to finished goods will
clarify the Multi Stage Dynamics Effect considering the different
matrixes keeping the Multiple Plant, Multiple finished good Warehouses,
Multiple Raw Material Warehouses.
Objective is to find optimum
distribution solution from RMW’s to Markets. In case of increase in market
demand, the solution should also throw light on estimation of additional
number and capacity of
RMW’s, where FGW stand for finished Goods Warehouse RMW stands for Raw
For simplicity, we shall confine ourselves to a mono-commodity situation
being distributed through a single mode.
3. The problem can be tackled with following assumptions.
(i) Demand of n-markets (at n-locations) are known. Let average and S.D’s of
market demands are :
d1, d2 …….. dn
S1, S2 ……… Sn
(ii) The demands of n-market will be catered to by m-FGW’s with capacity C1,
C2 ….. Cm. Let cost of transportation of one unit of Finish
Good from i-th FGW to j-th market be Xy (I = 1, 2, …. M)
J-1, 2, …….n)
(iii) FGW’s will receive goods from K-Plants with production capacity K1, K2
…….. Kk. Let cost of transportation from i-th Plant to the j-th FGW by Yij
(I=l, 2 ….. m) (J=l, 2, … k)
(iv) The Plants will receive raw materials from p-RMW’s with capacity P1, P2
……. Pp. Let cost of transportation of raw material from i-th RMW to j-th
plant are Zi (1= 1, 2, …p) (J=l, 2, ……… k)
Stage – 1
Find optimal transport solution for transportation of finished goods from m-FGWs
to n-markets following usual transportation model.
The solution gives amount of goods to be transported from i-th FGW to j-th
market so that
· demand of each market is satisfied
· capacity of each FGW is not overshoot
· total cost of transportation from FGW’s to the markets is minimized
Stage – II
Find optimal transport solution for transportation of finished goods from
k-Plants to m-FGW’s
The solution gives amount of goods to be transported from i-th Plant to j-th
FGW so that
· requirement of each FGW is satisfied
· each plant know how much to produce (within production capacity)
· total cost of transportation from Plants to FGW’s is minimized
Stage – III
Find optimal transport solution for transportation of raw materials from p-RMW’s
The solution will be similar to the solution for the 2nd stage since column
total i.e. values of K1, K2 ………….. Kk are known from the 2nd stage solution.
Thus, we know how much raw materials to be stocked in each RMW so that
· Demand of each market is satisfied
· Each RMW, Plant, FGW works with optimum capacity
· Total cost of transportation from RMW’s to Markets (via Plant and FGW’s)
5. Future Problems
I. Find set of relationships between :
Xij and Yij …………………… (1.1)
Yij and Zij …………………… (1.2)
and finally between
Xij and Zij …………………… (1.3)
Make sensivity analysis of the relationship (1.3). In otherwords find
various properties of (1.3) in terms of changes in values of
independent variables, parameters of the equation, monotonic behaviours,
continuity, growth pattern etc. and the properties which are invariant.
II. Since transportation of goods will be repetitive in nature over time,
few FGW’s/ RMW’s may stock over the optimum requirement to take benefit of
· Reduced transportation cost to FGW or RMW
· Quick supply to Markets (for FGW) or Plants (for RMW’s) for sudden
increase in demand.
Similarly, each Market may stock over the average demand to cater to
fluctuation of demand of the goods.
Hence, it may be necessary to know standard deviations of demand of the
markets. A trend analysis may also be supportive to the aforesaid actions.
The problem bails down to repetation of Stage I, II and III when demand of
the i-th market is di + Lsi where L is a positive real number to be chosen
as a function of market’s willingness to cater to what percentage of total
demand. Under normality assumption, Ê will be equal to 3 if 99.5% of total
demand are desired to be met.
III - Have Mid-term or Long-term estimation/ forecast of di’s
- Based on such forecasts see capacity augmentation required for the FGW’s
- Accordingly, find required capacity augmentation for Plants and RMW’s
If capacity augmentation of any of the FGW’s, Plants, RMW’s are not feasible
or practicable, then one can find additional number of
based on forecast of market demand. Alternatively, Plants have to think of
outsourcing the production to a location minimizing total cost including
transportation cost to markets, based on Minimax Principle.