A Supply Chain Modelling System-GEO RAJU-MNIT-JAIPUR

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A Supply Chain

Modelling System

Geo Raju

11/18/2012



CONTENTS

1. Introduction…………………………………………………………………………..1

2. Literature Review…………………………………………………………………..33. Methodology………………………………………………………………………….4

3.1. Integrated Trans system………………………………………………….4

3.2. Operating the Integrated Trans system…………………………..5

4. Conclusions…………………………………………………………………………….7

5. Reference……………………………………………………………………………….8





1 A Supply Chain Modelling System

1. Introduction

The term supply chain was first introduced by Houlihan (1984), and has since been defined in different

ways:

A supply chain is a system through which organisations deliver their products and services to their

customers.

(Poirier and Reiter 1996)

A supply chain is an integrated process wherein raw materials are manufactured into final products,

then delivered to customers (via distribution, retail, or both).

(Benita 1999)

A supply chain is a network of interlinked suppliers, manufacturers and distributors, as shown in thesimple example in figure 1. In practice, it is likely to be much more complex than that shown in figure

1.There may be a considerable mesh of suppliers to the suppliers, sometimes called second tier

suppliers, and so on to third, fourth and perhaps fifth tier suppliers. In addition, there may be a mesh of

distribution between manufacturing and the customer. This distribution mesh might include finished

goods inventory, national distributors, regional distributors, local distributors and retail outlets.

Not surprisingly, the inherent complexity of typical supply chains, combined with its economic

importance, has prompted the development of the relatively new research area of supply chain

management, building on the work done in the area of logistics. An important issue is the need for anapproach that can model the complexity of supply chains to give some insights into their behaviour.

What is giving added urgency to the problem are the recent developments in communications, primarily

based on Internet technologies, that offer the promise of connecting suppliers, assemblers and

customers in a seamless network of information that can form integrated supply chain management. In

such an integrated supply chain management structure, each entity can have a much greater visibility of




other portions of the supply chain, thereby allowing for improved decision making and, hence, the

ability to reduce costs and reduce the response time.

This paper aims to develop an integrated Trans system with supply chain reengineering models and with

an inventory model to model the network characteristics of the supply chain. A Trans-Net is used to

abstract and model the information, removing many of the complexities, while retaining the ability toanalyse the more important characteristics of the supply chain. This would allow, for example, different

designs of the supply chain to be modelled and analysed.

The Trans-Nets model is developed into a decision support system by integrating modelling methods for

supply chain reengineering (Trieneken and Hvolby 2001). The modelling methods for supply chain

analysis and redesign were derived from existing methods for business modelling (Trienekens and

Hvolby 1999).

Activity chain modelling (ACM, Hvolby and Barfod 1998) aiming at optimization of tasks and the

use of resources (cost reduction).

Event process chain modelling (EPC, Kim 1995 , Trienekens 1999 ) aiming at lead time reduction

and process improvement.

GRAI modelling (Doumeingts et al. 1992) aiming at improvement of decision structures and

information flows.

An arborescent (tree-like) inventory model (Yang and Wee 2001) is integrated to this network-based

approach (called Trans-Nets) to model the supply chain. In a competitive market environment, a buyer

has the privilege to decide on the number of deliveries when an order is made. The optimal number of

deliveries favoured by the buyer may not be the most economical for the vendor. If the number of

deliveries is decided in corporation with the vendor, overall integrated cost can be achieved. A

mathematical model taking into account the integration of the producer, distributor and retailer is

developed and this model can be integrated into the Trans-Nets to enhance the decision-making

involved.






3. Methodology

3.1. Integrated Trans system

The same structure of the Trans system is taken to conceive the architecture of the inventory integratedTrans system. Trans is a prototype system developed to implement the Trans-Net approach. It consists

of three main modules: the information engine, design engine and Trans engine.

Automatic

LayoutIdentification

ACM

EPC

GRAI gridNetwork

Sketch

Manual

New

Edit

Delete

Warehouse s

Customer s

Supplier(s)

Manufacturer s

Retailer s

Distributor s

Attribute Retrieve

Trans Algorithm

Attribute Update

Evaluation

Designers

Trans Engine

Information Sharing Mechanism (Internet Gateway, Database)

Design Engine

arborescent inventory model

Figure 2: Architecture of the integrated Trans system




The information engine mainly uses Internet technologies to pass information between supply

chain designers. It contains two main components: the Internet Gateway and the database. The

Internet Gateway provides the interactive interface. The information is stored in distributed

databases. Data can be taken from these multiple distributed databases and copied to the Trans

central database.

The design engine allows designer to generate a supply chain structure automatically (automatic

mode) and then to reengineer the supply chain using the mentioned models for supply chain

reengineering automatically. Manual mode is also provided to further customize the design.

Both automatic mode and manual mode are linked to the Trans central database. Therefore,

each component generated in the supply chain layout has its associated properties attached to

the central database.

The integrated Trans engine implements the Trans-Net algorithm and updates the properties of

each component and database record accordingly. The arborescent inventory model is

integrated into the Trans engine and on invoking the Trans engine, the attribute set such as the

lead time and inventory cost are determined.

3.2. Operating the Trans system

Step 1: Generating the initial design

Both automatic mode and manual mode can generate the design of a supply chain from the data in the

central database. In this case, assume the designer invokes the automatic mode to build the supply

chain layout.

Each node is attached to properties (‘ID, description, cost, lead time’) retrieved from the Trans central

database.

Step 2: Running the integrated Trans engine

The Trans engine is invoked to determine the attribute set: the total lead time, cost etc. Assume the

designer wants to improve the supply chain performance by reducing the costs and the response times.

One possible approach is to focus on those nodes that contribute most to the total cost and the total

lead time. Here as an inventory model has been integrated to the system the inventory cost would be

optimized and also we can get an optimal ordering policy for the whole supply chain.

At this point, the designer now has a number of possibilities to improve the supply chain by making

changes to the main elements contributing to the total cost and total lead time.

Step 3: Revised design I

The integrated Trans system provides the option of reengineering the supply chain automatically using

the models given for supply chain reengineering. The designer can also opt for the manual mode so that

the design can be customized according to the needs.




Step 4: Rerunning the integrated Trans engine

Once the Trans engine is invoked, the revised attribute sets are determined.

Step 5: Revised supply chain design II

An analysis of the contributions of different nodes to the total cost and total lead time for revised supply

chain design I shows further areas of improvement. Either automatic mode or manual mode can be

applied to change the properties of the concerned nodes.

Step 6: Rerunning the integrated Trans engine

The Trans engine is invoked again and the attribute sets are determined. If the designer finds the revised

supply chain optimum, the revised supply chain design II is accepted.

The supply chain designer can continue to carry out, in an iterative procedure, integrated Trans systemto identify further areas for improvement.




4. Conclusions

This paper has proposed an inventory model integrated network-based approach (called Trans-Nets) for

modelling supply chains. The integrated Trans-Net approach has the main potential benefit of

abstracting essential information so that multiple factors can be considered simultaneously and alsoprovides with the models for reengineering the supply chain automatically. Moreover, it has the

potential to be easily computerized given the mathematical algorithms inherent in the proposed Trans-

Net approach.

The arborescent inventory system is developed on the basis of assumptions such as instantaneous

replenishment and definite demand etc. These assumptions could come in conflict with the design

considerations used in the proposed system. To enhance designing of supply chain more models for

reengineering have to be included.

Future work will include integration and further elaboration and testing of modelling methods for supply

chain reengineering into the proposed system. The future works also include the application of the

proposed system for designing different supply chains. The aim is to eventually come up with an

integrated system for chain analysis and redesign.




5. Reference

Wu, T. and O'Grady, P. (2005) 'A network-based approach to integrated supply chain design',

Production Planning & Control, 16:5, 444 – 453.

Yang, Po-Chung and Wee, Hui-Ming (2001) 'An arborescent inventory model in a supply chain

system', Production Planning & Control, 12:8, 728- 735.

Trienekens, J. H. and Hvolby, H. -H. (2001) 'Models for supply chain reengineering', Production

Planning & Control, 12:3, 254 – 264.

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A Supply Chain Modelling System-GEO RAJU-MNIT-JAIPUR