SUPPLY CHAIN MANAGEMENT IN FOOD INDUSTRY

Supply chain management in food industry

Supply chain management in food industry

Introduction

Supply chains are now at the centrestage of business performance of manufacturing and service enterprises. Because of the inherent complexity of decision making in supply chains, there is a growing need for modeling methodologies that can help identify and innovate strategies for designing high performance supply chain networks. A large number of manufacturing and service organizations are therefore seeking modeling systems that can help identify and implement strategies for designing and improving their supply chain networks.

Supply chain decision making is a complex process. Some of the important reasons for the complexity of the decision making process are:

• large scale nature of the supply chain networks,

• hierarchical structure of decisions,

• randomness of various inputs and operations,

• dynamic nature of interactions among supply chain elements.

Modeling and analysis to gain a better understanding of the system complexity and to predict system performance are critical in the system design stage, and often valuable for system management. Thus there is an ever increasing need for modeling supply chains.

Supply chain decisions and models related to Food industry

Supply chain decisions

Supply chain decisions have been classified based on their temporal and functional consideration. Supply chain decisions can be broadly classified into three categories: Strategic (long-term), tactical (medium-term), and operational (short-term and real-time) according to the time horizon of the decisions.

Functionally, there are four major decision areas in supply chain management: Procurement, manufacturing, distribution, and logistics. In addition, there are also certain global decisions whose scope extends over multiple functions. There are strategic, tactical, and operational questions in each of these areas. These are described in detail by Shapiro .

Supply chain performance measures

Supply chain performance measures can be classified broadly into two categories : Qualitative measures (such as customer satisfaction and product quality) and quantitative measures (such as order-to-delivery lead time, supply chain response time, flexibility, resource utilization, delivery performance, etc.). In our study we consider only the quantitative performance measures.

Quantitative metrics of supply chain performance can be classified into two broad categories: Non-financial and financial.

Non-financial performance measures

Important metrics include: Cycle time, customer service level, inventory levels, resource utilization, performability, flexibility, and quality. There is a detailed discussion of these in . We will focus here on the first four measures (Cohen 1988).

Cycle time: Cycle time or lead time is the end-to-end delay in a business process. For supply chains, the business processes of interest are the supply chain process and the order-to-delivery process. Correspondingly, we need to consider two types of lead times: Supply chain lead time and order-to-delivery lead time. The order-to-delivery lead time is the time elapsed between the placement of order by a customer and the delivery of products to the customer. The supply chain process lead time is the time spent by the supply chain to convert the raw materials into final products plus the time needed to deliver the products to the customer.

Customer Service Level: Customer service level in a supply chain is a function of several different ...