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OPSM 305 Supply Chain Management

Ko ç Un iversity. OPSM 305 Supply Chain Management. Class 23: Strategic Alliances. Zeynep Aksin zaksin @ku.edu.tr. Next class. Vestel case Read the case before class Please e-mail presentation slides before class. Relating to practice. Efes: solved transportation problem using LP

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OPSM 305 Supply Chain Management

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  1. Koç University OPSM 305 Supply Chain Management Class 23: Strategic Alliances Zeynep Aksin zaksin@ku.edu.tr

  2. Next class • Vestel case • Read the case before class • Please e-mail presentation slides before class

  3. Relating to practice • Efes: solved transportation problem using LP • Vestel: Will see application involving other transportation related issues we will talk about today: vehicle selection, routing

  4. Data for routing • Mileage Estimation • Street Network • Straight line distances • This is of course an underestimate of the road distance. To estimate the road distance we multiply the straight line distance by a scale factor, . Typically =1.3.

  5. Vehicle Routing • The fleet : • types • sizes • costs • Customer : • location • demand • accessibility Delivery zone

  6. Vehicle routing problem Given the demand at i clients determine the itineraries of K vehicles with a given capacity Q

  7. VRP : heuristic approach • Savings algorithm (Clarke and Wright 1964) • Initial phase : • create n routes (0,i,0), where 0 is the transit point (or DC or depot) • calculate the savings sij = ci0 + c0j - cij and order them in decreasing order • Go over the savings list trying to combine the routes : • Find a route that terminates with i and another that starts with j • Verify capacity constraints Initial solution : Combine :

  8. 0-1-4-0 0-3-5-2-0 0-1-4-0 0-2-0 0-3-0 0-5-0 0-1-4-0 0-2-0 0-3-5-0 VRP : heuristic approach • Savings algorithm: example 0 1 2 3 4 1 18 2 7 15 3 10 7 6 4 22 13 22 19 5 20 11 6 4 20 Demand 1 : 6 2 : 4 3 : 4 4 : 6 5 : 5 Capacity 14 Distances : (1,4) (1,5) (3,5) (4,5) (1,3) (2,5) (3,4) (2,3) (1,2) (2,4) 27 27 26 22 21 21 13 11 10 7 Savings list : Solution : 0-1-0 0-2-0 0-3-0 0-4-0 0-5-0

  9. Objectives of a strategic alliance • Adding value to products: improving time to market, distribution times, etc. • Improving market access: better advertising, more channels, etc. • Strengthening operations: lowering system costs, cycle times, etc. • Adding technological strength • Enhancing strategic growth: overcoming entry barriers • Enhancing organizational skills: learning, self-learning • Building financial strength: risk sharing, increasing income, etc.

  10. SPs in SCs • 3PL • Retailer-supplier partnerships • Quick response • Continuous replenishment • Advanced continous replenishment • VMI • Distributor integration • Transshipment • Technical expertise sharing

  11. Main Characteristics of RSP

  12. Example: 3PL • Focus on core strengths • Provides technological flexibility • Provides other flexibilities: geographic locations, regional warehousing, etc. • Disadvantages: loss of control, 3PL interacting with customers • A form of outsourcing

  13. 3PL Success factors • Know your own costs • Measurability-data availability • Activity based costing • Customer orientation of the 3PL • Specialization of the 3PL • import-export • Small package • Warehousing • Ship logistics • Etc. • Asset-owning versus non-asset-owning

  14. 3PL Implementation Issues • Effective communication • Performance measures • Detailed contracts/agreements • Performance follow-up procedures

  15. Distributor integration: transshipment • “shipment of items between different facilities at the same level in the supply chain to meet some immediate need” • Between retailers • Between separately owned distributors: requires distributor integration, typically orchestrated by the manufacturer • Information system to enable inventory visibility • Incentives both ways so that distributors are willing to share their inventory

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