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Page 1 Stephen C. Graves Copyright 2008, All Rights Reserved
Update on Supply Chain Research
Stephen C. Graves MIT, E53-347
[email protected] http://web.mit.edu/sgraves/www/
Joint work with Sean Willems, Boston University, Katerina Lesnaia, Oracle, Tor Schoenmeyr, First Solar,
Xin Huang, McKinsey
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Page 2 Stephen C. Graves Copyright 2008, All Rights Reserved
Overview • Strategic inventory placement model for
optimizing safety stocks in a supply chain
• Capacity planning model for optimizing capacity investments and contracting in a supply chain
• Exploratory work on energy-related supply chains
Papers available on request!
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Page 3 Stephen C. Graves Copyright 2008, All Rights Reserved
Strategic Safety Stock Model: Intent
• Tactical model to determine the amount and positioning of safety stocks in supply chains
• Tactical model to support supply chain improvement teams
• Simple model, easily accessible, runs on PC, understandable inputs/outputs; academic version available from http://web.mit.edu/lfmrg3/www/
• Commercialized by Optiant; applications support both tactical and operational decisions
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Page 4 Stephen C. Graves Copyright 2008, All Rights Reserved
KIMES 100
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Page 5 Stephen C. Graves Copyright 2008, All Rights Reserved
Supply Chain: Before
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Supply Chain: Lead Times
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Supply Chain: Costs
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Page 8 Stephen C. Graves Copyright 2008, All Rights Reserved
Supply Chain: Optimized
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Supply Chain: Implemented
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Page 10 Stephen C. Graves Copyright 2008, All Rights Reserved
Supply-Chain
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Page 11 Stephen C. Graves Copyright 2008, All Rights Reserved
Key Benefits & Learning • Shows value from “holistic” perspective • Formalizes inventory-related supply chain costs, and
provides an optimal benchmark • Provides framework and standard terminology for cross-
functional debate • Shows the effectiveness of inventory, strategically
positioned in a few places to de-couple the supply chain • De-couple supply chain prior to a high-cost added stage;
and prior to product explosion • Most leverage from lead time reduction
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HP Supplies Inventory Modeling Project Regions Factories Suppliers Customers
Answer the bulk pen inventory question…
… in the context of what is best for the system
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• Electronic test system manufactured by Teradyne, Inc. • 3,866 part/locations • Used real data on supply chain topology, lead times, costs of parts
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Page 14 Stephen C. Graves Copyright 2008, All Rights Reserved
Research status - accomplished • Efficient algorithms for real-world supply
chains: stationary demand, no capacity constraints
• Extend to permit – non-stationary demand – capacity constraints – forecast-based ordering policy (e.g.,
MRP)
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Research status - ongoing • Relax assumption on common review
period, so as to include lot-sizing
• Permit dual sourcing or multi-modal processes
• Examine impact from smoothing of demand signals
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New research initiatives
• Supply chain design for solar panels • Supply chain optimization for wood pellets • Supply chain modeling for wind energy
projects • Life-cycle analysis for remanufactured
products