Supply Chain Design
Eric Sucky
Lehrstuhl für Allgemeine Betriebswirtschaftslehre, insb. Produktion und Logistik,
Otto-Friedrich-Universität Bamberg, Feldkirchenstr. 21, 96052 Bamberg,
eric.sucky@uni-bamberg.de
Abstract/Zusammenfassung
Strategic supplier selection decisions have to be long-term orientated considering mutual commitments between the partners involved, fixed costs upon selection of a new supplier in the form of investment in training, and technology, as well as significant costs of switching from one supplier to
another. By selecting strategic suppliers the network structure – the supply chain’s design – will be
influenced and determined over long periods of time. We propose a stochastic dynamic model for strategic supplier selection based on hierarchical planning approaches.
2
1
Kopfzeile 1 – wird später eingefügt
Introduction
From a physical perspective, a supply chain can be considered as a network of different geographically dispersed production facilities, where raw materials, intermediate
and finished products are transformed, warehouses and distribution centers, where
products are stored, and transportation links which connect the production facilities,
distribution centers and warehouses. From an institutional perspective, following the
proposal of Christopher,1 a supply chain “is a network of organizations that are involved, through upstream and downstream linkages in the different processes and activities that produce value in form of products and services in the hand of the ultimate
consumer.” This contribution focuses on the design of the physical supply chain infrastructure, which is also called “Network Design”, “Network Configuration”, “Supply
Chain Configuration”, or “Supply Chain Design”.2
2
The Supply Chain’s Structure
Corresponding to our definition, provided in section 1, we first introduce an adequate
formal characterization of the supply chain. Based on this characterization we are able
to emphasize the impact of supplier selection decisions on the supply chain’s structure.
i,k
2,1
1,1
2,1
3,1
4,1
1,1
2,2
3,2
1,2
3,1
4,1
3,2
4,2
2,2
4,2
2,3
4,3
a) initial situation
b) eliminating a supplier
4,3
2,1
1,1
3,1
4,1
3,2
4,2
3,1
4,1
3,2
4,2
2,2
1,2
1,2
2,3
2,3
4,3
1,3
2,4
c) activating a supplier
4,3
1,3
2,4
d) substituting a supplier
Fig./Abb. 1: Impact of supplier selection decisions on the supply chain’s structure
In general, supply chains are inter-organizational systems with a multiple number of
firms (e.g. manufacturers of finished goods, suppliers of intermediate products and
1
2
Vgl. Christopher (1998), S. 8.
Vgl. Bowersox/Closs (1996), S. 26; Chopra/Meindl (2004), S. 98.
Kopfzeile 2 – Titel – Wird später eingefügt
3
logistics service providers), each responsible for a specific set of nodes or links of the
supply chain.3
Supplier A
Production costs
7.665
8.445
16.925
33.035
60
120
0
180
4.500
2.250
1.125
7.875
12.225
10.815
18.050
41.090
Inventory costs
Distribution costs
Costs
Supplier B Manufacturer Supply Chain
Tab. 1: Upstream Planning
Each potential supplier can be characterized by its supply capacity, an agreed on minimum supply quantity, the plant specific lead-times, and the relevant costs of purchasing.
2.1 A Deterministic Supplier Selection Model
On the top-level of our hierarchical approach we model alternative dynamic supplier
selection strategies and the corresponding investment and switching costs. On the
base-level the impacts of the supplier selection strategies on mid-term performance
will be evaluated. In order to generate the base-level of our hierarchical approach for
strategic supplier selection, we first present a generic model for supplier selection.
  H J
H
J
 H
TRC base     cs hj  xhj   cf h  y h   ch j  inv j    ch  xh
 1  h 1 j 1
h 1
j 1
 h1
(1)
subject to
H
inv j  inv j1   xhj  d j for all  and j
(2)
h 1

J
 x
1 j 1
hj
 xh  sup h for all h
(3)
At the top-level of this hierarchical approach we model supplier selection alternatives
and the corresponding investment and switching costs. The model presented above
will be used as the base-level of the hierarchical approach to evaluate the impacts of
the supplier selection decisions on mid-term performance.
2.2 The Strategic Dynamic Supplier Selection Process
The complete planning period of the dynamic supplier selection problem comprises T
periods (t=1,...,T), e.g. five years. The state of the manufacturer’s supply side – the
3
Vgl. Christopher (1998), S. 8.
4
Kopfzeile 1 – wird später eingefügt
manufacturer’s supply system – at period t is characterized by the set of potential suppliers, the potential supply linkages, and the manufacturer’s plants.
Each potential supplier hH can be characterized by its supply capacity, an agreed on
minimum supply quantity, the plant specific lead-times, and the relevant costs of purchasing.
3
References/Literaturverzeichnis
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Basnet, C.; Leung, J. M. Y. (2005): Inventory lot-sizing with supplier selection, in: Computers & Operations Research 32, S. 1-14.
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Christopher, M. (1998): Logistics and Supply Chain Management – Strategies for Reducing Cost and
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Fleischmann, B.; Meyr, H. (2003): Planning Hierarchy, Modeling and Advanced Planning Systems,
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