Planning and Optimisation of a Complex Multinational Supply Chain – A Real-life Case Study

1. Planning and Optimisation of a Complex Multinational Supply Chain – A Real-life Case Study Mr. MasoudEsmaeiliRMIT University Dr. BehnamFahimnia UniSA, School of Management

2. Research Motivation This research was motivated by a supply chain planning problem faced by a multinational manufacturing/distribution company that produces and distributes metal vehicle parts. This research is a part of a PhD research which is half way through, expected to be completed in mid 2012.

3. Plan Source Make Deliver Buy Suppliers Manufacturers Warehouses End-users Transportation Costs Transportation Costs Transportation Costs Material Costs Manufacturing Costs Inventory Costs Research Problem

4. Research Problem… Local Manufacturers Local and Foreign Markets Local Suppliers Local and Foreign DCs Foreign Manufacturers Foreign Suppliers

5. Research Problem… * Multiple product types * Multiple raw material types * Multiple raw material suppliers * Multiple manufacturers * Exchange rates and tariff costs* Economies of scale in procurement and transport * Multiple warehouses * Multiple markets * Multiple transport routs * Economies of scale in transport * Exchange rates and tariff costs

6. Mathematical modelling Mixed-Integer Linear Formulation • The objective function minimises the sum of: • Cost of raw material procurement • Production costs in local and foreign plants • Transportation and storage costs • Tariff costs • Major model constraints: • Procurement and production constraints • Storage and transportation constraints • Economies of scale in procurement and transport

7. Memetic Algorithm optimisation

8. Research direction Environmentally Sustainable Supply Chain Management (ESSCM) • Long term success of SC executives must be built not only on profitability but also on their contribution to the future of people and our planet. • A ESSC model is a SC with improvement of the environmental impacts explicitly considered.

9. Research direction Triggers for ESSCM: • Pressures (government legislation): • SC executives are under pressure from their regulators, major investors, banks, and insurers to consider sustainability criteria for running greener operations. • More supplier standard indices are tracking the sustainability performance of companies (e.g. Australian SAM Sustainability Index and Dow Jones Sustainability Index). • Incentives: • Governments encouraging voluntary environmental initiatives • Customers purchase their products with sustainability in mind • University graduates are seeking more sustainable companies

10. Call for collaborators • Collaborators are invited to join our multidisciplinary multinational research teams • Working areas in the context of ESSCM: • Quantifying environmental performance indicators • Mathematical modelling with respect to the identified performance measures • Development of solution approaches for solving the proposed MILP and MINLP models • Computer programming and coding of the algorithms • Performance analysis and evaluation of the numerical results

11. “Thanks for your attention”