MIT Center for Transportation & Logisticsctl.mit.edu/sites/ctl.mit.edu/files/attachments/Rice... ·...
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11/17/16 1 MIT Center for Transportation & Logistics Supply Chain Resilience Evaluation And Mitigation: Analysis of Results Shell Chemicals Best-in-Class SC1x November 16-17, 2016 Rotterdam, The Netherlands Game Details • Objective: – Design a resilient risk mitigation strategy to minimize the total supply chain cost while maximizing the order fill rate over an uncertain future. • Costs: – Holding Costs ~25% annually – Landed Product Costs • Finished Goods $100 /unit • WIP $80 /unit • Raw Materil $50 /unit – Selling Price $225 per unit – No Stockout Costs • Service Level – Order Fill Rate (OFR) at customer location – Under normal conditions, order fill rate is ~99% 3
Transcript of MIT Center for Transportation & Logisticsctl.mit.edu/sites/ctl.mit.edu/files/attachments/Rice... ·...
11/17/16
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MIT CenterforTransportation&LogisticsSupply Chain Resilience Evaluation
And Mitigation:Analysis of ResultsShell Chemicals Best-in-Class SC1x
November 16-17, 2016Rotterdam, The Netherlands
GameDetails• Objective:
– Designaresilientriskmitigationstrategytominimizethetotalsupplychaincostwhilemaximizingtheorderfillrateoveranuncertainfuture.
• Costs:– HoldingCosts ~25%annually– LandedProductCosts
• FinishedGoods $100/unit• WIP $80/unit• RawMateril $50/unit
– SellingPrice $225perunit– NoStockout Costs
• ServiceLevel– OrderFillRate(OFR)atcustomerlocation– Undernormalconditions,orderfillrateis~99%
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Whatisthemostimportantfordevelopingmitigationpolicy?Least?Why?
A. SupplierDisruption
B. PlantDisruption
C. DCDisruption
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HowtodefineaSCRiskManagementStrategy?
Commonlyanyoperationsmanagementpolicy/strategyaimsatminimizingcost,maximizingROI,etc…
Whichriskmanagementstrategyisbetter?
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But…whataboutservicelevelincaseofadisruption?
Whichstrategyisbetter?
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Bothofthemcanputyououtofbusiness!!!L
“WhatistheROIofhealthinsurance?”
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TheConceptofTrade-Off
Whichstrategyisbetter?
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Therearemoreoptions
Thissetofsolutionsdominatestherest(“EfficientSolutions”)
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ExamplesofEffectiveResilienceStrategies
SincepolicyAbelongstotheEfficientsetinthethreehypotheticalscenarios,thenwesaythatpolicyAisan
effectiveresiliencestrategy
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Assessmentofmitigationstrategies
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- +$Cost
ServiceLevelJ
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TwoMethodsofScoring• Method1
– Scoresonthebasisofhowmanytimesapolicyisdominatedbyanotherpolicy.
– AParetofrontierisidentifiedandthoseteamsareremoved,0pts. ThenanotherParetofrontierisidentifiedamongtheremainingteams,thoseteamsget1pt andthentheyareremoved. Repeatuntiltherearenomoreteams.
– Basicallytherearenoconstraintsonthismethodofassessment,soyoucanbeontheParetobuthaveterribleservice.
• Method2– Assumesthatthereareminimumserviceandmaximumcostconstraints.– Scores2 pointsinthegreen,1intheblueand0 intheyelloworredzones
(checkgraphsandresults).
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TenDisruptionProfilesatTenDifferentCompositions
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Scenarios --> 1 2 3 4 5 6 7 8 9 10Sunny Day 100% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Partly Sunny 82% 2% 2% 2% 2% 2% 2% 2% 2% 2%Slightly Sunny 55% 5% 5% 5% 5% 5% 5% 5% 5% 5%Slightly Cloudy 37% 7% 7% 7% 7% 7% 7% 7% 7% 7%
Very Cloudy 19% 9% 9% 9% 9% 9% 9% 9% 9% 9%Nightmare 0% 11% 11% 11% 11% 11% 11% 11% 11% 12%
Short Overlapping 0% 0% 0% 0% 0% 0% 100% 0% 0% 0%Supplier Down Longterm 0% 0% 0% 0% 0% 100% 0% 0% 0% 0%
DC Down Longterm 0% 0% 0% 0% 100% 0% 0% 0% 0% 0%Even Probability 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%
Forexample,SunnyDayis100%scenario1,0%therest.Evenprobabilityconsidersallscenarioswith10%ofprobabilityofoccurrence,etc.
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CollectivePolicySelections
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PolicySelectionsbyTeam
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Team# GroupName FGI WIPBackupDC
BackupPlant
BackupSupplier
1 SuperSupplers 'RUs 1000 200 5 5 62 UweandRik 400 100 7 7 73 MO 350 350 6 6 64 YW 1450 800 1 3 75 Martijn 950 300 5 5 66 MarMina 1250 1000 1 4 47 TEAMTONANA 2000 2000 1 1 18 AgCo 1000 300 2 2 69 JF 325 325 6 6 610 Martin&Sophie 300 300 6 6 611 NazireIdil 2000 1000 1 1 312 TEAMTONANA1 100 100 7 7 7
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SunnyDay
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PartlySunny
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SlightlySunny
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SlightlyCloudy
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VeryCloudy
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Nightmare
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ShortOverlapping
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SupplierDownLongterm
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DCDownLongterm
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EvenProbability
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ScoringMethod1&2
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Group Score10 19 23 32 81 118 125 1712 274 326 3511 417 51
Green Yellow Red Group Score10 0 0 1 2010 0 0 3 2010 0 0 5 2010 0 0 9 2010 0 0 10 205 0 5 8 105 0 5 12 100 0 10 2 00 0 10 4 00 0 10 6 00 0 10 7 00 0 10 11 0
PolicySelectionsbyTeam:RelativePolicyAssessment
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Winners
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Team# GroupName FGI WIP Back-upDC
Back-upPlant
Back-upSupplier
Redundancy Flexibility
1SuperSupplers'RUs
1000 200 5 5 6 Mix Med-H
3 MO 350 350 6 6 6 Med High5 Martijn 950 300 5 5 6 Med-H Med-H9 JF 325 325 6 6 6 Med High
10 Martin&Sophie 300 300 6 6 6 Low-M High
SomeObservations
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• NoROIonaninvestmentthat,whensuccessful,nothinghappens– Morelikecalculusforaninsuranceinvestment,butidentifythetrade-off
• Multiplewaystoprotect– atdifferentcosts– Differentpoliciesdowellunderdifferentscenarios– Considertheportfolioofpotentialoutcomescenarios
• Scenariocreationisaninformedprocess– Considerthevulnerabilitiesofyoursupplychain
• DownstreammattersmorethanUpstream– …forthissupplychainbutitisnotnecessarilyuniversallytrue– DCprotectionmoreimportantbecauseitprotectsthecustomerwhere
salesarewon/lost;italsoaddstimeforPlantandSupplierresponse
• CombinationofRedundancy&Flexibilitynecessary– Redundantinventorycoversbeforebackupcapacityavailable– Optionsforadditionalcapacity(flexibility)coversforlongerterm
