Supply chain design algorithms, General approaches and supply...

Supply Chain Design Algorithms

General approaches and algorithms for designing supply chains

Design of supply chains is carried out by some criterion. Most often such a criterion is logistical costs. Evaluation of logistics costs in the supply chain is one of the most important professional tasks of the logistician. On the one hand, by lowering logistics costs, the organization can improve its financial performance. On the other hand, the reduction of logistics costs is of great interest to the end user, since it receives more favorable price conditions. Therefore, the search for various options for cost savings in logistics - this is the current direction of the development of supply chain management.

As an example of the implementation of general provisions for the design of logistics systems, we consider two approaches. The first is a more general approach, which describes the design process in the form of a sequence of certain steps. To make this sequence more dynamic, we have introduced several feedbacks that allow us to choose alternatives, taking into account the corresponding procedures, not only for the logistics system as a whole, but also for its subsystems. The design algorithm is shown in Fig. 10.1.

The second approach, more specific and applicable to the distribution system, includes the following steps:

• Definition of the strategic objectives of the distribution system;

• market research;

• forecast of statistical indicators of the material flow (mean, variance, etc.),

• Probabilistic calculation of reserve indicators for different levels of the distribution system;

• Development of alternative configuration options for the projected distribution system;

Supply Chain Design Algorithm

Fig. 10.1. Supply Chain Design Algorithm

• an estimate of the total logistics costs for each option using the criterion of a minimum of the given costs:

where 3 "- the reduced costs for each option; 3 , 3m - annual operating and transport costs, respectively; К - total capital investments in construction of distribution centers (taking into account discounting); T - the payback period of the option.

Iterative Supply Chain Design Algorithm

Given the significant share of the transport component in the structure of logistics costs, organizations are trying to reduce the transport costs in the supply chain. However, by reducing transport costs in the supply chain, it is necessary to take into account that a reduction in transportation costs can lead to an increase in the cost of storing the shipment of goods delivered from the consumer and, in general, an increase in the total logistics costs in the supply chain. A logical approach to reducing transportation costs is to jointly estimate the cost of shipping and storing a consignment of goods.

Flows of goods, presented for transportation, are characterized by such parameters as: volume (quantity), intensity of dispatch and consumption, lot size, i.е. quantity of deliveries, frequency of deliveries, etc. It is not difficult to see that some of these parameters can be determined using the model E00_, which allows finding the optimal order size. Thus, one of the main tools for reducing logistics costs in transportation may be an analytical inventory control system, and solutions in the field of inventory management depend on transportation solutions.

The conducted researches have shown that the choice of the best variant of delivery can be presented in the form of the generalized algorithm presented on fig. 10.2 and containing the most common tasks to be performed when performing different logistics functions in supply chains.

Generalized design algorithm for supply pricing

Fig. 10.2. Generalized design algorithm for supply pricing

For example, the transport task block in supply chains includes:

• choice of mode of transport for a unimodal delivery method or on a separate section of a mixed mode of transportation;

• the choice of vehicle, as well as the calculation of the number of vehicles;

• solution of the transport problem at a known location of suppliers and consumers, as well as taking into account existing warehouses in a particular region;

• solution of the problem of transportation routing;

• an estimation of the upper and lower bounds of the delivery time of goods in accordance with the logistics concept "just in time".

The inventory management and logistics warehouse provides the solution of the following tasks:

• determination of the number of warehouses, regional and other distribution centers and their location, which can significantly affect the tasks of the transport unit, since warehouses can be considered as intermediate points in the delivery scheme;

• calculation of the optimal order quantity (EO & pound;)) to determine the required number of vehicles, taking into account their carrying capacity. At the same time, when calculating the optimal order, modifications of the model taking into account discounts, physical limitations and other parameters can be taken into account;

• application of models of multi-nomenclature orders that affect the optimal loading of vehicles;

• application of models and strategies of inventory management in consumer activities

• Applying models of inventory management in an echeloned logistics system.

The algorithm for constructing the supply chain provides an iterative procedure, taking into account the interrelationship and interaction of transport and inventory management units and warehousing logistics. An iterative procedure means that the intermediate result obtained at each stage is, on the one hand, the initial variant for the subsequent stage in each block under consideration (transportation or inventory management and warehousing), on the other hand, the initial variant for solving problems in the neighboring block.

It is known that the calculation of the optimal order size using the Harris-Wilson formula uses data on transportation costs (costs for order fulfillment) that can not be calculated without determining the delivery route. Certainly, the routes can be optimized and not optimized, and in order to optimize the overall logistics costs, one should strive for the optimal route variant when forming the delivery route, which in turn depends on the number and location of warehouses in the region.

The dependence of the tasks of one block on the other allows us to conclude that the design of the supply chain is possible only by the method of sequential search of the most preferable variants with subsequent complication. Examples of this complication include the redesign of the supply chain with an increase in the number of warehouses included in the system, or with a change in the carrying capacity of vehicles. Thus, at a certain stage of the design, it is possible to obtain variants of the value of the supplies with the least expenses for storage and transportation, which reflect the result of solving the single-objective problem. Then, one of these options can be taken as optimal.

Let's say a firm has n suppliers and t consumers. When designing supply chains, you can consider several options, including transit and warehouse forms of supply. Transit (direct) delivery can be carried out in two versions: 1) fully loaded vehicles (for example, cars); 2) optimal lots, the size of which is calculated by the Harris-Wilson formula. In the transit form, other variants due to combinations of modes of transport are also possible.

With the warehouse form of the organization of deliveries of goods, several options are possible, depending on the modes of transport used, the traffic of vehicles or containers, the type of supplies (independent or multinomenclature) and other factors. For example, suppliers are provided with delivery to the central warehouse by rail, and from the warehouse - by automobile independent deliveries, lots can be optimal in size (one option) or sent in fully loaded cars (second option). The replacement of rail transport by road will give two more options for deliveries, in which the delivery from the central warehouse will be carried out by vehicles of lower carrying capacity. Then you can provide for the consolidation of goods in the central warehouse, from which further multi-item delivery is organized (there may be several options: taking into account the limitations on the capacity of the vehicle and the optimal lots).

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