SSCNDT

Everything associated with an incoming invoice, including buying, renting, and leasing, for both primary (BOM) and indirect (MRO/NPR) processes.

Purchasing

Purchasing related to direct inputs for production, such as raw materials and components listed in the Bill of Materials.

Primary Purchasing (BOM)

Purchasing for Maintenance, Repair, and Operations (MRO) or Non-Product Related (NPR) items, like office supplies or services.

Indirect Purchasing (MRO/NPR)

1. Specification (what)
2. Selection (who)
3. Contracting (how)
4. Ordering
5. Monitoring
6. After-care.

Van Weele’s Purchasing Process Steps

Describe what a product/service must do or provide, focusing on outcomes rather than technical details.

Functional Specifications

Detail exact requirements for a product/service, making comparisons easier but potentially limiting supplier innovation.

Technical Specifications

Evaluate suppliers based on organizational factors like experience, financial stability, and reputation.

Selection Criteria

Judge supplier proposals based on content, such as price, quality, and delivery terms.

Award Criteria

Includes acquisition costs (price, taxes), ownership costs (inventory, warehousing), and post-ownership costs (reputational impact).

Total Cost of Ownership (TCO)

1. Strategic (high profit impact, high risk)

2. Bottleneck (low profit impact, high risk)

3. Leverage (high profit impact, low risk)

4. Noncritical (low profit impact, low risk).

Strategic Sourcing Categories

Analyzing historical invoice data (supplier, cost category, amount) to identify purchasing patterns and control costs.

Spend Analysis

Suppliers ship directly to buyers, eliminating intermediate warehouses but potentially increasing transportation costs.

Direct Shipment Network

A route where a truck delivers to multiple locations (or picks up from multiple suppliers), optimizing transportation costs.

Milk Run

Goods are transferred directly from inbound to outbound trucks at a distribution center, minimizing storage time.

Cross-Docking

Optimizes facility locations and capacity allocation to minimize costs while meeting demand constraints.

Capacitated Plant Location Model

Determines optimal facility locations by minimizing transportation costs based on distances and shipment volumes.

Gravity Location Model

A routing problem where a salesman must visit N cities exactly once and return to the origin, minimizing travel distance.

Travelling Salesman Problem (TSP)

A TSP solution method: Start at a city, repeatedly visit the nearest unvisited city, and return to the start.

Nearest Neighbor Heuristic

Swaps two connections in a tour to reduce total distance, accepting the change only if it improves the solution.

2-opt Improvement Rule

Extends TSP by adding vehicle capacity constraints and multiple routes to serve customer demand from a depot.

Vehicle Routing Problem (VRP)

Merges routes based on savings from combining two customers into one tour, prioritizing high savings and respecting capacity limits.

Clarke & Wright Savings Algorithm

Extends VRP by allowing multiple depots, requiring vehicles to return to their origin depot after deliveries.

Multi-Depot VRP

Selects a subset of pre-generated tours to cover all customers at minimal cost, ensuring each customer is visited exactly once.

Set Partitioning Problem

Combines multiple transport modes (e.g., rail + truck) to optimize cost and efficiency for long-distance shipments.

Intermodal Transportation

Customizes transport networks based on product/value (e.g., air for high-value, truck for bulk) and customer density.

Tailored Transportation

Restrictions specifying when a customer must be visited, either as single (earliest/latest) or multiple allowed time slots.

Time Windows

Adjusts vehicle routes in real-time to accommodate new orders or changes during the day.

Dynamic Planning

A road network where distances between locations follow straight-line (Euclidean) geometry, ignoring directional constraints.

Euclidean Network

Defines the supply chain strategy, including stages, outsourcing decisions, and alignment with competitive goals.

Phase I of Network Design

Identifies regional facility roles and approximate capacities, considering demand, tariffs, and risks.

Phase II of Network Design

Selects potential sites within regions based on infrastructure (hard: suppliers, transport; soft: workforce, community).

Phase III of Network Design

Chooses exact facility locations and allocates capacity, balancing costs, service, and responsiveness.

Phase IV of Network Design

Manufacturers ship directly to customers, bypassing retailers; centralizes inventory but increases transport costs.

Drop-Shipping

Final leg of delivery from a distribution center to the customer’s doorstep, often the most expensive part of shipping.

Last-Mile Delivery

Centralizing inventory reduces safety stock but may increase transport costs; ideal for high-value, low-demand items.

Inventory Aggregation

Combining orders over time to reduce shipping frequency, lowering costs but delaying responsiveness.

Temporal Aggregation

Unpredictable customer demand requiring flexible routing and inventory strategies (vs. deterministic demand).

Stochastic Demand

Hard: Must be met (e.g., vehicle capacity). Soft: Preferred but flexible (e.g., driver break times).

Hard vs. Soft Restrictions

Determines whether a facility will function as a production site, warehouse, or cross-dock, impacting flexibility and costs.

Facility Role Decision

Macroeconomic factors influencing global supply chain profitability and location decisions.

Freight and Fuel Cost Fluctuations

Assesses stability and regulations in potential facility locations to avoid disruptions.

Political Risk in Network Design

Trade-off between customer service (response time, variety) and supply chain costs (inventory, transport, facilities).

Value vs. Cost in Distribution Networks

Transport small, time-sensitive shipments (e.g., UPS, FedEx), using air/truck/rail and offering tracking/value-added services.

Package Carriers

Truckload (TL): Full truck for one shipment. Less-than-Truckload (LTL): Consolidates smaller shipments, increasing transit time.

TL vs. LTL Trucking

Allocates customers to depots by rotating a line counterclockwise, grouping nearby customers until vehicle capacity is reached.

Backward-Sweep Algorithm

Pre-selects viable tours for the Set Partitioning Problem using heuristics (e.g., savings algorithm) to reduce computational complexity.

Column Generation

Simplifies the problem by allowing fractional tour selections (xj ≥ 0) to estimate lower bounds for branch-and-bound algorithms.

LP-Relaxation in Set Partitioning