A multi-functional tri-objective mathematical model for the pharmaceutical supply chain considering congestion of drugs in factories

Supply Chain Management (SCM), by way of one of the critical issues in the managerial aspect, plays a significant role in tackling humanitarian problems and difficulties. Due to some limitations (e.g., production capacity and storage capacity) and desires (e.g., cost reduction and rising revenues), supply chain managers always seek the best response to the amount and type of communication between different SCM levels. In the upcoming research, a Pharmaceutical Supply Chain (PSC) with three objective functions is developed, aiming to simultaneously minimize total costs, unfulfilled demands, and reduce the waiting time at the factory entrance. In the forthcoming research, the subject literature and research in the PSC modeling and problem-solving are discussed. A nonlinear programming model is then proposed in line with the previous research to solve the existing short-comings. Also, multi-objective decision-making methods are used to match the conflicting objectives of the model simultaneously. Then, GAMS commercial software is used to solve the problem of different sizes. Finally, the wide sensitivity analysis and evaluation of the results are discussed, and future development suggestions are presented.

Integrating Direct and Indirect Sales Channels Under Decentralized Decision Making

Ralf Seifert

Many manufacturers have started to use virtual stores as a direct distribution channel in addition to their existing indirect retail channels. These companies must now decide how to integrate these channels. The alternatives are to operate dedicated distribution channels for the virtual store and the retail stores or to extend the cooperation between the manufacturer and the retailers to include the virtual store in the existing distribution channels. In such an integrated supply chain, retail stores would continue to serve all in-store customers, but excess stock at retail stores could be used to fill some online orders. We analyze this problem from a supply-chain perspective by developing and solving mathematical models for both a dedicated and an integrated supply chain. Our mathematical models are based on a problem faced by Hewlett-Packard Company (HP) and incorporate the major parameters of a supply chain with online and in-store customers. We use the models to analyze how the supply chains can be coordinated, how the optimal supply-contract parameters can be computed, and how the supply-chain profits can be allocated between a manufacturer and its retail-channel partners. Our coordinating supply contract involves joint specification of the wholesale price, an ending-inventory subsidy, and a transfer payment from the manufacturer's virtual store to the retailer when using excess retail stock. We also compare the benefits of supply-chain integration with the benefits of supply-chain cooperation. We illustrate our analytical results with numerical examples from HP.

2006

A model for the design of effective and resilient supply chain security management systems

Ximena Gutiérrez Rueda

The current business environment has become more risky and variable. In particular, the recent terrorist attacks against western economies have revealed the vulnerability of global supply chains. These events showed that companies that move cargo internationally are subjected to a broader spectrum of risks, for which they might not be yet prepared. The perception of a higher level of security risks has motivated a wide variety of efforts from the academic, public and private sectors to increase global supply chain security. First, governments, border agencies and international organizations are designing and promoting new security initiatives and regulations to force companies to take more responsibility for the security of their supply chains. Second, academics have started to apply traditional concepts of risk and security management to the supply chain context, leading to the theory of supply chain security management (SCSM). Third, companies are following the new mandatory security regulations. However, most of them are still waiting before implementing those initiatives which are not yet mandatory. At the moment, each of these parties is approaching this problem from different a perspective. However, they all face one main common challenge: Increasing security without affecting supply chain performance or creating new trade barriers. The management of security in a supply chain environment has been usually associated with the implementation of rules and activities that are obstacles for the efficient flow of goods, non-value adding operations or cost generators. It is therefore necessary for these parties, to develop security initiatives which enhance security without affecting supply chain performance or jeopardizing trade. This study builds on the theory of SCSM which is still in its infancy. The literature review shows that some of the most relevant gaps are: i) the disconnection between the governments and border agencies' security initiatives and the theory developed by academics, ii) the non-inclusion of a systematic, holistic and process perspective in the design of SCSM initiatives, and iii) the lack of adequate management tools for companies to implement and maintain the new SCSM initiatives. Based on these literature gaps and the challenges imposed by the new supply chain security risk context, the main research question of this study is: How companies and governments can develop effective (capable of reducing the probability of disruptions occurrence) and resilient ( preparing the supply chain to recover from disruptions) SCSM systems? The main goal of the study is to develop a SCSM model which can help companies and governments to make use of the most relevant lessons from the existing academic theories and the new security initiatives, by integrating them in one practical comprehensive management tool. The research study investigates the supply chain security management by companies with large experience in managing high-risk areas and products. Initially, a survey is conducted to study how some of these companies have increased their security level by implementing a voluntary security program. The analysis of this data enables the identification of some of the factors which can positively impact the success of these programs and confirms the systemic nature of supply chain security management programs. Following these results, supply chain security systems are studied from a more holistic perspective by carrying out two in-depth case studies. The analysis and comparison of these case studies allow the identification of the most relevant challenges that these companies face to manage their supply chain security. Furthermore, they show that the traditional methods of corporate security management present several obstacles to deal with these challenges. The lessons and insights obtained through the analysis of the empirical data, together with the SCSM best practices identified in the literature, are integrated into the proposed "Supply Chain Security Management Model". This model provides a concrete framework to help practitioners adding the process dimension to the management of security. The framework also allows a better understanding and managing of the interactions between the supply chain and the security systems. To complete this research study, the model is validated by applying it to the two case study companies. The results of this initial exercise show that the proposed SCSM model constitutes an innovative management tool for the evaluation of SCSM systems, which drives the attention to critical points that were neglected in the past. This practical application exemplifies how the model can be used to collect and represent in a comprehensive way the security related information that is usually spread amongst different company functions and business partners. The main advantage of such representation is that it allows for a quick identification of the areas with potential for improvement.

EPFL2007

Collaborative working capital management in supply networks

Daniel Seifert

Supply chain management is widely accepted as a means for companies to gain competitive advantage. While product and information flows have been widely covered in the literature, relatively little attention has been paid to the management of a supply chain's finances. The objective of this dissertation, therefore, is to add to the emerging literature on financial flows. One inroad to researching financial flows in supply chains is to build on finance theory. Research in finance has analyzed financial flows from a credit point of view. Although researchers have identified more than ten motives for why firms offer and demand trade credit, a comprehensive review of this literature is missing. Following an introduction in Chapter 1, we therefore review this literature in Chapter 2 of this dissertation. We find that two explanations for the existence of trade credit receive broad support. Suppliers offer trade credit to increase product sales. Buyers demand trade credit to circumvent credit rationing. Following the review, we develop a detailed agenda for future research. We find that the relevant operations management literature builds only on a fraction of the insights from the finance literature and propose in-depth studies of capital access, transaction pooling, and control protection as promising areas for future research. Another way to researching financial flows in the context of supply chains is to leverage the methodological richness of the finance domain. In Chapter 3, we therefore investigate optimal financial flows by analyzing secondary data through multivariate regression. To test our hypotheses, we compile panel data on 3,383 groups of public United States firms from three databases. One of these databases is Revere Relationships, a relatively novel database on commercial relations. We find that our data are consistent with the causal relations and theoretical predictions of the operations management literature. Firm profitability is positively associated with payment delay. Payment delay, in turn, is positively associated with the capital cost difference between buyer and supplier and negatively associated with the price elasticity of demand and the deterioration rate of inventory. However, we do not observe any significant interactions between these factors, which raises a number of questions for future research. Another well established methodology in the finance domain is the analysis of stock market reactions to corporate events. Supply chain researchers have used this methodology to analyze the effect of corporate events such as product introduction delays, total quality management implementations, and supply chain disruptions. However, despite the fact that supply chain management is concerned with connected entities, these studies have mainly focused on single firms. In Chapter 4, we therefore study the shareholder value loss associated with disruption announcements across suppliers, customers, and rivals. Our event study finds that suppliers experience -1.24%, customers -0.07%, and rivals -0.19% abnormal stock market returns over a two-day period when firms announce supply chain disruptions. We also implement cross-sectional regression to test several hypotheses. For suppliers, dependence on the disruption announcing firm aggravates the effect. The substitutability of the disruption announcing firm, however, seems to be irrelevant in both the suppliers' and the customers' case. To facilitate the adoption of our results by practicing managers, we consolidate the previously generated insights and propose three trade credit strategies ("win-win", "follow", and "squeeze") and a decision tree in Chapter 5. Furthermore, we highlight an innovative example of a win-win strategy (reverse factoring) and examine it through a survey of 213 finance and operations managers. On average, we find that companies that use reverse factoring benefit from a reduction in working capital of 13%. The same managers report that suppliers benefit, too, by reducing working capital by 14%. However, we find that three factors distinguish successful from less successful implementations – choosing the right banking partner, ensuring CEO sponsorship, and involving at least 60% of the supply base. We complete the dissertation with a conclusion in Chapter 6.