A case study on redesign of supply chain network of a manufacturing organization

The purpose of this paper is to analyze the case of a manufacturing firm situated in an industrial city of India, focusing on supply chain management issues of the concerned organization from two operational perspectives: supply side (or the procurement side) and the distribution side of the system.

The authors first considered the outsourcing decision‐making problem in a static environment using analytical expression by means of a variable fraction of demand. Next, the authors extended the scope of this problem by considering outsourcing decisions in a dynamic environment, using the sequential decision‐making approach with various operational and inventory factors. Finally, the authors carried out the study of the distribution side of the supply chain of industry using discrete event simulation.

It was observed that, in the case study organization, because of the rather unstructured approach in dealing with the outsourcing perspective, the authors suggested the adoption of a more scientific approach in computation of fraction of demand to be outsourced. Further, since the distribution network typically experienced high inventory levels throughout the supply chain, it was decided upfront to optimize this performance measure.

The primary objectives of this exercise are to: address the operational concerns of a real‐life manufacturing environment; apply the theoretical models in a realistic environment, and compare the results of theory with practice; and provide actionable managerial recommendations.