Proposal for Dissertation

Submitted to
Dr. Sapna Popli

Submitted by

Ankit Kumar

Roll No: 170301008

Table of Contents
Research Topic ........................................................................................................................................ 3
Background ............................................................................................................................................. 3
Literature Review .................................................................................................................................... 5
Gaps Analysis .......................................................................................................................................... 6
Research Objective ................................................................................................................................. 6
Research Question .................................................................................................................................. 6
Methodology........................................................................................................................................... 7
Possible Analysis: .................................................................................................................................... 7
References .............................................................................................................................................. 8
Research Topic
Creating a model for optimizing supply chain network design using analytics.

Background
Supply chains are very important, and often overlooked, part of our daily lives. Almost
everything that we buy in a store comes to us as a part of a supply chain and managing
these networks is a complex and ever evolving task.
Supply chain management is managing of the flow of goods, information and services and
includes all processes that transform raw materials into finished products. It involves the
aligning of a business's supply-side activities to gain a competitive advantage in the
marketplace and maximize value for customer. SCM represents an effort by suppliers to
design and implement supply chains that are as efficient and economical as possible.
Supply chain network design is the method of locating and trim down or optimize the
facilities within the supply chain, determining the capacity of these facilities, determining
how to source demand through the network and selecting modes of transportation in a
manner that provides the required level of customer service at the lowest cost.
 In the image above of supply chain model, a SKU may be taken from any of the
manufacturing plants and flow through different distribution centres or Warehouse to reach
any given customer. Even though this is fairly simple model, the complexity will increase
when one considers large number of SKU’s with various sourcing options, leads times
constraints, capacity constraints, transportation modes and costs that must be considered.
Supply chain network design models yields the most powerful and efficient way to solve
such problems. These supply chain models provide insights for strategic decision support
functionality to understand and assess complex supply chain relationships.

Network design concept is gaining acceptance in supply chain management. This is because
organizations no longer just take care of multi-tier suppliers in the form of inter-connected
chains but rather manages a whole network of suppliers for their key purchases. The concept
of supply network has changed as a result of globalization and quick growth of Internet which
has resulted to reduced gaps between suppliers and buyers of the world. The network design
concepts are applied in the areas of production facilities, operational facilities (like service
locations), logistics facilities, transportation, distribution, and retailing. The actual design
depends upon the scope, supply chain strategy, risks, cost and uncertainties, and demand
information. The key design considerations in network design are - nodes and links, direct
shipments, milk runs, in-transit mergers, domestic transit routes, international transit routes,
last mile transit routes, locations of plants, depots, warehouses, distributor storage, retail
outlets, and risks related to each node and link. The key aspects that need one should consider
are - strategic factors, technological factors, macroeconomic factors, political factors,
infrastructure factors, competitive factors, socioeconomic factors, localization, response time
expectations (of customers), facility costs, and logistics costs.

There are 3 important elements of a world class supply chain network.

1. Network design based on Strategy: With competing and complex business goals—
such as, improving operating margins, enhancing the customer experience,
minimizing capital and lowering the carbon footprint —a appropriate supply chain
strategy must be fully aligned with the business strategy. Amazingly, many
organizations begin reducing network costs before they define how the network can
be fully leveraged to align with the business strategy. Uncertainty in product mix and
demand volumes, margin goals, product returns and obsolescence, expanding
markets, dynamic customer service strategies and value-added opportunities are just
some of the considerations that are often given minimal consideration or overlooked
entirely.
2. Focus on Optimization of Total Profit: An increasing number of organizations are
asking the question: “How can supply chain Surplus can be maximized?” This is a
different objective than typical network optimization projects, which define the
 objective as reducing costs and maintaining customer service levels. At present, a
combination of operating situations/scenarios are required that drive alternative
network models. Then sensitivity analysis is carried out to estimate the impacts and
how a company is focusing to improve the key parameters that drives shareholder
value. Some examples comprise of: capital employed, margins, EBIDTA, operating
expenses, tax effectiveness, working capital, and cash-to-cash conversion.
3. Ongoing Process versus Project: A World class supply chain networks changes as the
sourcing adapts to market changes, product line performance varies, and companies
integrate. A world class network includes an ongoing process that emphases on the
flexibility aspects of the supply chain and safeguards that objectives are met every
time and over a range of different market scenarios while enhancing the key
parameters that drives shareholder value.

Literature Review

Lazaros G.Papageorgiou (2009) in his research paper has talked about various
methodologies that can enhance the decision making for process industry supply chains to
optimise the infrastructure and planning. One of the main factors to improve the capacity
utilisation and infrastructure is the absence of uncertainty. Ha has also stated the
importance of incorporating business, financial and sustainability aspects in to the supply
chain.

Zachary Hall, Rajan Batta, Robert Szczerba (2001) talks about various state of the art tools
and software available for supply chain optimisation. They have concluded in their report
that industry trends are such that they would go for purchasing technology rather than
developing the tools themselves. They have also addressed the integration of different
phases of product life cycle, limitations of basic and optimisation-based ERP system, and
focus on various supply chain networks.

Lambert, Douglas M., Martha C. Cooper, and Janus D. Pagh (1998) recognised the
differences between logistics and supply chain and concentrated on determining how to
successfully implement supply chain framework. They conducted various case studies and
involved multiple members of supply chain to support their research.

Harland, Christine M (1996) have identified various definitions of supply chain management
and connected them using systems approach by summarizing the associated bodies of
knowledge. The internal and external supply chain, the dyadic relationship and inter-
business network are characterised as systems levels of supply chain management. The
empirical research has been done to discuss the behavioural aspects of chains, networks
and relationships in the European automotive market. The gaps have been identified that
deals with customers and supplier’s perceptions of quality, price, delivery, service and
range.
Santoso, Tjendera, et al. (2005) in their paper proposed a stochastic programming model
and solution for solving network design problems in a supply chain. The existing approaches
were too restrictive to accommodate a large number of variables thus limiting the capability
of problem solving. Their methodology involved sample average approximation technique
to compute high quality solutions to large scale problems with almost infinite number of
scenarios.

Klibi, Walid, Alain Martel, and Adel Guitouni. (2010) criticized the optimisation model by
analysing supply chain network design problems under uncertain conditions. They pointed
out some drawbacks and the missing facts in the literature. The paper discusses about the
major disruptive events that can prove to be a threat to the supply chain network, and also
reviews key environmental factors. Several definitions of responsiveness, robustness and
resilience are reviewed in conjunction with their importance in overall supply chain
network.

Gaps Analysis:
Taxes can have a significant influence on the entire supply chain structure. With the
implementation of central tax system, such as GST, multiple state taxes are now eliminated.
This in turn can help the companies to consolidate their warehouses, as practice of
maintaining a warehouse in each state to avoid tax, can be done away with.

Also with the advent of different advanced technologies, transportation modes have
evolved. Cost of transportation is one of the major cost incurred in supply chain. This forms
the context of this dissertation, as how the companies need to transform their existing
design of supply chain network to obtain cost efficient logistics and proving better customer
service.

Research Objective
The main objective behind this dissertation is to design a supply chain of a manufacturing
company. To provide a better clarification, the above objective can be stated as:

“To design the supply chain network with aim to maximize supply chain surplus”

Research Question

1. How to design supply chain network that can deliver the required service level at the
lowest cost?

This problem address financial aspect of decisions over a multi-year strategic planning
horizon and, starting with the current state of the supply chain, aiming to determine the
capacity of facilities and best location to match demand and supply. This also addresses
 the issue of optimizing number of warehouses and manufacturing units after
implementation of GST and other regulatory changes.

2. How to design supply chain network that optimizes inventory in the complete supply
chain?

This problem addresses the issue low lack of co-ordination in the traditional supply
chain. Increase in inventory will lead to increase in cost of total supply chain .

3. How to design supply chain network that has optimum logistic cost?

Finally, this problem will address the need for optimizing the logistic cost as due to
technological advancement, infrastructure development, and regulatory changes.

Methodology

For the dissertation /research work, the data will be collected from secondary sources.
These data will give us insights that is required to develop a supply chain network design
model.
For this analysis, following data will be required:
 Portfolio of SKU produced in different manufacturing units.
 List of warehouses and customer list each unit is serving.
 Distance between warehouse, manufacturing and customers.
 Warehouse handing cost
 Primary freight data from all manufacturing unit to warehouse.
 Secondary freight data from warehouse to the customer.

All the data will be in structured form, so complete analysis is quantitative method.

Analysis tools: To analyse the data and get a useful insights, I will use Microsoft Excel.

Possible Analysis:

• The products should first be categorized into clusters for aggregation of the data.
There may be different ways to cluster the data. Most efficient way will be chosen
for analysis.
• Next, the distance matrix should be prepared between different sources and
destinations in the network using the longitude and latitude information..
 • The rate / cost matrix should be prepared for the network based on secondary data
available.
• Next the demand and supply constraints should be understood and incorporated in
the model as per the data available.
• Finally, the optimization should be done with all the constraints..
• One thing to keep in mind is that the transportation cost should form the major part
of the total costs in comparison to the inventory cost if it is low value item.
• In case the inventory holding costs are more than the transportation costs for high
value item, the inventory optimization techniques should be used instead.

References
 Lazaros G.Papageorgiou (2009), Supply chain optimisation for the process industries:
Advances and opportunities, Computers & Chemical Engineering, Volume 33, Issue
12.
 Zachary Hall, Rajan Batta, Robert Szczerba (2001), Supply-Chain Optimisation, OR
Insight, Volume 14, Issue 2, pp 20–30.
 Lambert, Douglas M., Martha C. Cooper, and Janus D. Pagh. (1998), "Supply chain
management: implementation issues and research opportunities." The international
journal of logistics management 9.2: 1-20.
 Harland, Christine M. (1996), "Supply chain management: relationships, chains and
networks." British Journal of management 7: S63-S80.
 Klibi, Walid, Alain Martel, and Adel Guitouni. (2010), "The design of robust value-
creating supply chain networks: a critical review." European Journal of Operational
Research 203.2: 283-293.
 Santoso, Tjendera, et al. (2005), "A stochastic programming approach for supply
chain network design under uncertainty." European Journal of Operational
Research 167.1: 96-115.
 Website : Supply Chain 24 7, Article Title: A Blueprint for Supply Chain Optimization,
Date Accessed :November 29, 2018.