Supply Chain Management in the 21st Century

Foreword 9
Synopsis 9
The didactical approach 9
The aim of this textbook 10
Chapter distribution and learning objectives 13
1 An Introduction to Supply Chains in the 21st Century 19
An introductory Supply Chain case: The evolution of the supermarket sector in the Netherlands 19
The importance of global Supply Chains (SC) has grown rapidly due to globalization 25
Organizational resources and assets 29
Designing and managing a Supply Chain requires the use of metrics 31
Product and production process 33
The basic architecture of mass production and distribution 35
Demand, orders, and the bullwhip effect 39
Facility location and Customer Response Time 40
Mobile service centres: Reversed supply 41
Technological trends that will affect future supply chain operations 42

2 Forecasting in a Supply Chain 47
Forecasting as a valuable tool to optimize Supply Chain planning 47
Forecasting for products with a sales record1 48
Forecasting and exploring sales data patterns 48
Combining level, trend, and seasonal components in a single demand 52
From time series decomposition to forecasting 56
Assessing the reliability of the model and calculating forecast errors 57
Forecasting using binary regression 58
The third forecasting method: Holt-Winters exponential smoothing10 61
Forecasting with the aid of regression analysis 67
Collaborative forecasting and planning in a Supply Chain 67
Chapter summary 70

3 Capacity Planning and Facility Location 71
Capacity Planning and Facility Location Decisions 71
Capacity Investment, Capacity Costs, and Capacity Classification 74
Instruments for hedging supply against unexpected demand change 75
Mass customization and capacity 76
Capacity planning and geographical location decisions 76
Decision Support Tools 78
Designing a production and distribution network 80
Using linear programming for capacity planning 81
A general model for optimizing capacity decisions 88
Location decisions based on gravity models 88
Location decisions and geographic concentration of competitive suppliers. 89
Location decisions and Geographic Information Systems (GIS) 92
Capacity planning in a Supply Chain setting 93

4 Production Planning in a Supply Chain 95
Production Planning in a Supply Chain 95
Extending the model with subcontracting and deploying a flexible workforce 105
Adding more variations to the production planning model 110
Production planning in a competitive environment 110
Materials Requirement Planning (MRP) as part of production planning 114
Lean production and just-in-time (JIT) processes 116

5 Inventory Management in a Deterministic Scenario 119
Classification based on inventory purpose 121
Inventory accounting, information technology, and inventory costs 122
Economic Order Quantity model 125
The Reorder Point (ROP) 128
Optimal Economic Order Quantity with quantity or volume discounts 128
From an example to a general calculation of the economic order quantity with all-unit quantity discounts 130
Quantity discounts and supply chain optimization 132
Product aggregation combined in a single order 132

6 Inventory Management under Uncertainty 135
Inventory Management under Uncertainty 135
Costs associated with understocking and overstocking 136
Quantifying uncertainty: Probability scenarios 137
Safety inventory – or safety stock (ss) 139
Safety inventory, Cycle Service Level, and fill rate 140
The impact of aggregating and centralizing safety stock 144
Calculating holding costs for cycle inventory, safety inventory, and shipment 148
Reviewing inventories: Continuous and periodic policy 148
Postponement as a tool to reduce inventory in a manufacturer setting 149
Cycle Service Level and fill rate 150
Management recommendations to reduce costs of safety stock 153

7 Optimal Customer Service Level, Sourcing Policies, and Risk-Sharing 155
Optimal customer service level, sourcing policies, and risk-sharing 155
Backlogging and stocking-out 160
To insource or to outsource: That is the question! 161
Selecting suppliers and competitive bidding 165
Total Cost of Ownership 166
Risk-sharing strategies between supplier and customer 167
Booking systems and prepayment arrangements 176

8 Asset Mobility and Infrastructure for Supply Chains in the 21st Century 179
A Concise Overview of Infrastructure Assets and Its Underlying
Network Structure for Asset Mobility 179
Transportation and infrastructure: A classification from uncommon to common 183
Equivalent to conveyor belts: Pipelines 184
Freight transport by air 186
Freight transport by railway 187
Freight transport by water 191
Freight transport by road 198
Passenger service and transport 202
A brief overview of the future of freight and persons mobility 203
Infrastructure assets, congestion, and pricing for congestion 221
The real value of infrastructure assets: Networks and Intermodality 226
Intermodality 229
Real-time tracking of shipments 231
Last-mile delivery in city centres 232

9 Distribution Network Configuration and Optimal Logistics Flows 237
Distribution Network Models and Optimal Flows 237
Shortest path problem 240

10 Revenue Management and Optimizing Capacity Usage 261
Revenue Management and Optimizing Capacity Usage 261
Dynamic pricing over time 262
An example 272

11 Managing Bottlenecks and Waiting Lines in a Supply Chain 281
Managing bottlenecks and waiting lines in a Supply Chain 281

12 Sustainability and Corporate Social Responsibility in a Supply Chain 305
Sustainability and Corporate Social Responsibility in a Supply Chain The Cobalt Case in the Manufacturing of Electronic Devices 305
Introduction 306
What is Corporate Social Responsibility?4 307
Moving from an individual firm CSR policy to a Supply Chain CSR policy 310
Reporting and metrics for Supply Chain performance 311
Blockchain technology: A tool to improve supply chain sustainability? 311
Recycling and waste disposal, considered as a reverse Supply Chain10 312
Drivers of increasing waste streams: Producers and consumers 318
Intergenerational natural resources usage 321
Case: The global food Supply Chain and managing bioresources sustainably 322
A second dimension of sustainability in the food Supply Chain: Food waste 328