Supply Chain Network Design: Understanding the Optimization behind Supply Chain Design Projects

Supply Chain Network Design: Understanding the Optimization behind Supply Chain Design Projects

Supply Chain Network Design: Understanding the Optimization behind Supply Chain Design Projects

Supply Chain Network Design: Understanding the Optimization behind Supply Chain Design Projects

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Overview

This book is aimed at an important and under-served niche within the supply chain market: strategic supply chain design. Almost all supply chain professionals need to know about this discipline. No current book covers the theory and practice in a way that ensures readers will be successful with this discipline in the field. Strategic network design is about selecting the right number, location, and size of warehouses, plants, and production lines. It is about determining the territories of your facilities, what product should be made where, and how product should flow through the supply chain. It is about developing a good model of your supply chain so you can make good operational decisions. Network design is important because a good design helps a firm execute its strategy. To do it right, it requires analytics and optimization. And, when firms do it right, they can reduce supply chain costs by 5-15% which can translate into tens of millions of dollars of savings for the firm. The book brings together our experience in completing 100s of these projects, our teaching of this material, and our understanding of the science that drives these studies. The book is ideal for supply chain managers, analysts, and consultants who must do these studies, for people who work for a company or organization with a supply chain and want to understand the design and strategy better, and for professors who want to bring a practical and intellectually interesting material to the classroom. Our goal is to help you deeply understand this topic. We covers the topics with realistic case studies, discussions of practical consideration, and a mix of the science. This helps you understand the topic, understand how it applies to you, and build your intuition. We hope you enjoy the book!

Product Details

ISBN-13: 9781981277520
Publisher: CreateSpace Publishing
Publication date: 09/01/2012
Edition description: New Edition
Pages: 280
Product dimensions: 6.69(w) x 9.61(h) x 0.59(d)

About the Author

Michael Watson is currently the world-wide leader for the IBM ILOG Supply Chain Products. These products include the network design product, LogicNet Plus XE. He has been involved with this product since 1998 when the product was owned and produced by LogicTools and then sold to ILOG in 2007 prior to being acquired by IBM. During this time, he has worked on many network design projects, helped other firms develop network design skills, and helped shape the direction of the group and product. He is an adjunct professor at Northwestern University in the McCormick School of Engineering, teaching in the Masters in Engineering Management (MEM) program. He holds an M.S. and Ph.D. from Northwestern University in Industrial Engineering and Management Sciences.

Sara Lewis is currently a world-wide technical leader for the IBM ILOG Supply Chain Products. She has run many full-scale network design studies for companies around the world, she has conducted hundreds of training sessions for many different types of clients, leads a popular network design virtual users group, and helps create educational material for network design. She has been involved with this group since 2006 when the network design tool was owned and produced by LogicTools. Prior to LogicTools, she held various supply chain roles at DuPont. She holds a Bachelor’s degree in Business Logistics and Management Information Systems from Penn State University and is a fre- quent guest lecturer on the topic of network design at several U.S. universities.

Peter Cacioppi is the lead scientist for IBM’s network design product, LogicNet Plus XE. He also holds the lead scientist role for IBM's inventory optimization solution. He first began developing network design engines in 1996 as employee number one for LogicTools, a supply chain planning company that was sold to ILOG in 2007 prior to being acquired by IBM. His responsibilities include translating business design issues into formal mathematical problems. His scientific contributions have ranged from developing a targeted network design computational engine to designing both the GUI and the engine for network design multi-objective analysis. He holds an M.S. in Computer Science (with a thesis in Operations Research) from the University of Chicago, and a BA in Computational Physics from Dartmouth College.

Jay Jayaraman currently manages the ILOG Supply Chain and Optimization consulting services team within IBM. This team solves clients’ most challenging supply chain and optimization business problems. He brings extensive hands-on expertise in supply chain network design and inventory optimization, with projects ranging from large scale, global supply chain network design strategy to implementing production planning and inventory optimization projects at the tactical level. He has successfully led and managed consulting projects for clients around the world and in many different industries such as chemicals, consumer packaged goods, retail, transportation, pharmaceutical, and many others. Prior to joining LogicTools (later acquired by ILOG and then IBM), he worked for Kuehne & Nagel, helping run network design projects and implement the results. He holds an M.S. in Industrial Engineering from the University of Florida, and a Bachelor’s degree in Industrial Engineering from Anna University, India.

Table of Contents

Preface xvi

Part I: Introduction and Basic Building Blocks

Chapter 1: THE VALUE OF SUPPLY CHAIN NETWORK DESIGN 1

Chapter 2: INTUITION BUILDING WITH CENTER OF GRAVITY MODELS 23

Chapter 3: LOCATING FACILITIES USING A DISTANCE-BASED APPROACH 37

Chapter 4: ALTERNATIVE SERVICE LEVELS AND SENSITIVITY ANALYSIS 63

Chapter 5: ADDING CAPACITY TO THE MODEL 83

Part II: Adding Costs to Two-Echelon Supply Chains

Chapter 6: ADDING OUTBOUND TRANSPORTATION TO THE MODEL 99

Chapter 7: INTRODUCING FACILITY FIXED AND VARIABLE COSTS 127

Chapter 8: BASELINES AND OPTIMAL BASELINES 139

Part III: Advanced Modeling and Expanding to Multiple Echelons

Chapter 9: THREE-ECHELON SUPPLY CHAIN MODELING 157

Chapter 10: ADDING MULTIPLE PRODUCTS AND MULTISITE PRODUCTION SOURCING 177

Chapter 11: MULTI-OBJECTIVE OPTIMIZATION 207

Part IV: How to Get Industrial-Strength Results

Chapter 12: THE ART OF MODELING 217

Chapter 13: DATA AGGREGATION IN NETWORK DESIGN 237

Chapter 14: CREATING A GROUP AND RUNNING A PROJECT 261

Part V: Case Study Wrap Up

Chapter 15: CASE STUDY: JPMS CHEMICALS CASE STUDY 277

Index 295

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