ABSTRACT
For any manufacturing and production process to be profitable, a cost effective supply chain is necessary. Improving the quality of all supply chain processes results in; reduce cost, improve resource utilization, and improve process efficiency. To achieve these, modeling of the supply chain to determine the most efficient strategy is of paramount necessity.
In this work the three performance measure classes of; resources, output and flexibility are used, and the four performance measures used are utilization capacity, stockout fraction, volume flexibility and stockout quantity .The measure gave a high utilization of available capacity, average volume flexibility, high stockout quantity and low stockout fraction respectively for the various production plants (with detergent washing powder plant as the highest).The low stockout fraction and high stockout quantity signifies a poor customer service level. This was found to be as a result of supply fluctuations, resulting in insufficient raw material resources for the manufacturing echelon to meet with product demand.
Finally, the model formulated was used to test the effect of supply chain strategies of eliminating the distribution echelon of the supply chain, integrating the flow of information throughout the chain, implementing a just-in-time (JIT) inventory policy and modifying the order quantity procedure.
Implementing the just-in-time (JIT) strategy was found to be most efficient
TABLE OF CONTENTS
Title Page – – – – – – – – – – i Certification – – – – – – – – – ii
Dedication – – – – – – – – – – iii
Acknowledgement – – – – – – – – iv
Abstract – – – – – – – – – – v
Table of contents – – – – – – – – – vi
List of figures – – – – – – – – – vii
List of table – – – – – – – – – – viii
Chapter one: Introduction
1.0 General – – – – – – – – – – 1
1.1 Objectives, Scope and Limitation – – – – – – 3
Chapter two: Literature Review
2.0 General – – – – – – – – – 6
2.1 Strategic Decision Making – – – – – – 7
2.2 Operational Decision-Making – – – – – – 8
2.3 Models Overview – – – – – – – 10
2.3.1 Determination Analytical Model – – – – – 11
2.3.2 Stochastic Analytical Model – – – – – – 12
2.3.3 Simulation Models – – – – – – – 13
2.3.4 Economic Models – – – – – – – 13
Chapter Three: Supply Chain Performance Measures
- General – – – – – – – – – 15
3.1 Qualitative Performance Measures – – – – – 15
3.2 Quantitative Performance Measures – – – – – 16
3.2.1 Measures Based on Cost – – – – – – – 16
3.2.2 Measure Based on Customer Responsiveness – – – 17
3.3 Performance Measures Selection – – – – – 18
3.4 Flexibility Measurement – – – – – – 19
3.4.1 Delivery Flexibility – – – – – – – 21
3.4.2. Mix Flexibility – – – – – – – – 22
3.4.3 New Product Flexibility – – – – – – 22
Chapter Four: Materials and Methods
4.0 General – – – – – – – – 24
4.1 Data Selection – – – – – – – – 25
4.2 Data Collection – – – – – – – – 27
4.3 Output Quantity – – – – – – – – 27
4.4 Demand Quantity – – – – – – – – 30
4.5 Raw Materials Sourcing – – – – – – – 32
Chapter Five: Performance Measure Analysis
5.0 Resource Measures – – – – – – – 33
5.1 Output Measures – – – – – – – – 35
5.2 Flexibility Measures – – – – – – – 40
5.3 Evaluation and Analysis – – – – – – – 45
5.3.1 Supply Chain Performance – – – – – – 45
5.3.2 Service Performance – – – – – – – 46
Chapter Six: Modelling
6.0 Supply Chain Concepts/Strategies – – – – – 47
6.1 Modelling Method – – – – – – – – 50
6.2 Discussion – – – – – – – – – 63
Chapter Seven: Conclusion
- Conclusion – – – – – – – – – 64
7.1 Suggestion for Further Study – – – – – – 65
References – – – – – – – – – – 66
Appendices – – – – – – – – – 69
CHAPTER ONE
INTRODUCTION
1.0 General
A supply chain can be said to be an integrated process wherein a number of various business entities work together in an effort to acquire raw materials, convert the same to the desired product and deliver to the consumer. Beamon, (1999).
This chain traditionally is characterized by the forward flow of materials and a backward flow of information. From a practical standpoint, the supply chain concept arose from a number of changes in the manufacturing environment, including increasing competition, the rising cost of manufacturing, the continuously shrinking resource base for manufacturing and also the globalization of market economics.
Current interest has sought to extend the traditional supply chain to include “reverse logistics” that is product recovery for the purposes of recycling, re-manufacture and/or re-use as the case may be concurrently, there has been increasing public attention placed on the overall condition of the natural environment. This attention may be largely attributed to information provided by the media, through growing numbers of environment and consumer interest groups, Fiksel, (1996). The most commonly perceived enemy to environmental protection is production and manufacturing operations. That is, production and manufacturing processes are viewed as the cuprites that harm the environment, in the forms of waste generation, ecosystem disruption and depletion of natural resource. Fiksel, (1996) indeed, waste generation and natural resource use, primarily attribute to manufacturing, contribute to environmental degradation by outstripping the earth’s ability to compensate and recover, and thus are not sustainable by the earth’s ecosystem so some supply chain are extended to include a closed loop; including supply chains operations designed for end-of-life product and packaging recovery, collection and re-use, Beamon, (1999); and the disposal of any manufacturing and production process by-products.
The distribution and logistics process determines how products are retrieved and transported from the warehouse to retailers. These products may be transported to retailers directly, or may be moved to distribution facilities, which in turn, transport product to the retailers. The products may be transported to retailers directly, or may first be moved to distribution facilities, which in turn, transport products to the retailers. This process includes the management of inventory retrieval transportation and final product delivery. These processes interact with one another to produce an integrated supply chain. In some manufacturing process, the line between the production planning, inventory control process and the distribution and logistics process is integrated, as materials and components are moved from warehouses to assemble line.
The design and management of these processes determine the extend to which the supply chain works as a unit to meet the required performance objectives. Figure 1 below shows the supply chain of River State Vegetable oil company.
Figure 1 Schematic representation of RIVOC supply chain
1.1 Objectives, Scope and Limitation
The need for modeling of supply chain with the aim of determining the optimal strategy to employ in order to solve management age-long problem of supply chain which include: design of value added activities, throughput time evaluation, order management and supplier selection and development has become a thing of great necessity .Also, today’s changing industry dynamics demand that manufacturing and production processes to be in competition for the following production service level be improved upon;
- Improve customer service level
- Reduced cycle time
- Improve quality of products and services
- Reduced cost
- Integrated information technology and process flow.
- Planted and managed movement and
- Flexibility of product customization to meet customers’ needs.
All these have influenced the design, operation and objectives of the supply chain system. Cahill etal (1992)
Effective management of supply chain systems is achieved by identifying customer service requirements, determining inventory placement and levels, and creating effective policies and procedures for the coordination of supply chain activities. Bardi etal (1996). This work seeks to address the issues of developing a model for testing the different concepts and strategies of supply chain management.
- Recommending the most efficient strategy for manufacturing industries to adopt.
- Evaluating and analyzing the supply chain
- Determine the flexibility of the supply chain for profitable manufacture as a result of uncertainty of the manufacturing environment.
- Its scope is limited to the Rivers regrettable oil company limited and covers only the supply and manufacturing echelons of the supply chain.
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