OPSM 305 Supply Chain Management

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# OPSM 305 Supply Chain Management - PowerPoint PPT Presentation

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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Koç University

### 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
• Vestel: Will see application involving other transportation related issues we will talk about today: vehicle selection, routing
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.
Vehicle Routing
• The fleet :
• types
• sizes
• costs
• Customer :
• location
• demand
• accessibility

Delivery zone

Vehicle routing problem

Given the demand at i clients

determine the itineraries of K

vehicles with a given capacity Q

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 :

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

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.
• Enhancing strategic growth: overcoming entry barriers
• Enhancing organizational skills: learning, self-learning
• Building financial strength: risk sharing, increasing income, etc.
SPs in SCs
• 3PL
• Retailer-supplier partnerships
• Quick response
• Continuous replenishment
• VMI
• Distributor integration
• Transshipment
• Technical expertise sharing
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
3PL Success factors
• 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
3PL Implementation Issues
• Effective communication
• Performance measures
• Detailed contracts/agreements
• Performance follow-up procedures
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