Knowledge that Transforms

We study the problem of scheduling jobs on a single batch processing machine to minimize the total weighted completion time. A batch processing machine is one that can process a number of jobs simultaneously as a batch. The processing time of a batch is given by the processing time of the longest job in the batch. We present a branch and bound algorithm to obtain optimal solutions and develop lower bounds and dominance conditions. We also develop a number of heuristics and evaluate their performance through extensive computational experiments. Results show that two of the heuristics consistently generate high‐quality solutions in modest CPU times.

Many governments have established, for various reasons, local confent purchasing rules for companies that wish to operate in their country. These requirements force firms to purchase a certain amount of components from suppliers located in that country. This paper describes local content rules and develops models to select suppliers while satisfying local content provisions. The single plant model can be transformed into a knapsack problem that is solved by a ranking procedure, and the solution provides insight as to the manner in which local content rules impact more generalized models. Furthermore, we illustrate possible negative effects to local industry that may result when governments set the local content percentage too high, and we discuss methods for companies to circumvent local content rules. Finally, we address the issue of local content rules in the context of multi‐plant global sourcing decisions, and we provide an efficient solution procedure for the classical plant location model extended to include local content rules at each site

This paper presents a model for evaluating product fulfillment rates in an assemble‐to‐order system with a two‐level bill‐of‐material structure (products and components). Inventories are kept at the component level and are used to support service levels to product demands; each component is managed under a periodically reviewed, decentralized order‐up‐to policy. Product demands are correlated in a given period but are independent across periods. We develop the demand fulfillment rate for each product when demands are filled based on a first‐come‐first‐served discipline with limited priorities for different products within a period. We show that the fulfillment rate can be expressed as a multivariate normal probability when the product demands follow a multivariate normal distribution. We then use a numerical example to discuss computational issues and bounds associated with the evaluation of the demand fulfillment rates. Finally, we consider a model for minimizing the total inventory investment subject to given product demand fulfillment rates.

This research investigates the interaction between formation of logistics partnerships and supply chain restructuring in the U.S. computer industry via a survey of 30 ongoing partnerships. Partnerships that have included restructuring are compared to those that have not. Examples of representative partnerships are presented. The survey results indicate that restructurers use partnerships to facilitate restructuring. Restructurers and non‐restructurers form partnerships for different reasons and realize different types of benefits. Furthermore, restructurers realize greater benefits than do non‐restructurers and view their partnerships as more successful. Restructurers report dramatic improvements in logistics cost (1l‐30%) and order cycle time (62%). The research contributes to the existing literature by highlighting restructuring as an important aspect of logistics partnership formation and by presenting empirical data that shows how the two strategies are linked.

We are moving rapidly into an age of transnational manufacturing, where things made in one country are shipped across national borders for further work, storage, sales, repair, remanufacture, recycle, or disposal; but our laws, policies, and management practices are slow in adjusting to this reality. They are often based on inaccurate premises. This article examines these premises and suggests what they imply for management of manufacturing. First, a common view is that manufacturing investment in the industrialized nations is declining and shifting to the developing countries. This is not true. Investment in manufacturing in both industrialized and developing nations is increasing and, in absolute value, there is a lot more investment in industrialized countries than in developing countries. Second, a related view argued by many is that manufacturing does not have a bright future in the rich countries. I argue that manufacturers can thrive in the industrialized countries if they learn how to add more value for the end users. They must go beyond productivity improvement to producing more technologically advanced and customized products, responding faster to changing customer demands, and appending more services to their products. Doing all this is easier in the industrialized countries because the needed skills and infrastructure are more readily available there. Third, another potentially misleading notion is related to why companies invest in manufacturing abroad. Access to low‐cost production is not the main motivation in most cases; rather it is access to market. Superior global manufacturers use their foreign factories for much more: to serve their worldwide customers better, preempt competitors, work with sophisticated suppliers, collect critical marketing, technological, and competitive intelligence, and attract talented individuals into the company. They build integrated global production networks, not collections of disjointed factories that are spread internationally. Thus their investment in manufacturing abroad is not a substitute for investment at home, it is a complement. Building and managing such integrated global factor networks is the next challenge in manufacturing.

In this paper, we present a review of the models for the management of global supply chains and some evidence concerning current practice. Our review is restricted to the literature on intrafirm global supply chains and is motivated by empirical data concerning the extent of intrafirm globalization. The review of the literature suggests that research has not evolved in a coherent manner, while the data suggest that the extent of globalization is also hard to gauge. Indeed, the journey toward supply chain globalization is far from over. Significant gaps exist between theory and the practice. We conclude with a summary of directions for future research.

This paper discusses the relationship between business process reengineering and channel performance for firms implementing electronic data interchange (EDI) linkages within the U.S. grocery industry. Both quantitative and qualitative data sources are combined to test the hypothesis that channel transformation involving adoption of EDI and redesign of replenishment processes enables performance improvements more than an order of magnitude greater than implementation of EDI alone. This new process, enabled by EDI, provides retailers with 50‐ 100% higher inventory turns for products on continuous replenishment processes (CRP) relative to retailer performance using traditional ordering processes. Firms adopting EDI without using CRP to reengineer the ordering processes have failed to realize any statistically significant improvements in either inventory levels or warehouse stockouts. This research provides evidence to support the claims of process reengineering that are common in the popular business press, but for which statistically significant empirical evidence is minimal. The findings of the research also demonstrate the potential improvements that firms can realize through extending the business process reengineering concept to include the firms' entire supply chain.

Reducing lead time enables a company to react more quickly to demand information and, hence, to better match supply with uncertain demand. But it is only one lever for improving response capability. Managers are familiar with others (e.g., excess capacity, supplier choice, and so forth) but lack techniques to quantify the impact of adjusting these levers. Here, we enumerate a number of these levers and present a model whereby they might be combined into effective response capability. The impact of adjusting these levers is illustrated by data obtained from a skiwear manufacturer that did so. Some of the insights that resulted run counter to intuition.

Campbell Soup's continuous replenishment (CR) program is a novel innovation designed to improve the efficiency of inventory management throughout the supply chain. With CR (1) retailers pay a constant wholesale price but continue to participate in consumer promotions, (2) retailers transmit to the supplier daily inventory information via electronic data interchange (EDI), and (3) the supplier assumes responsibility for managing retailer inventories, i.e., vendor managed inventories (VMI). We develop simple inventory management rules to operate CR, and we test these rules with a simulation using actual demand data provided by Campbell Soup. On this sample we find that retailer inventories were reduced on average by 66% while maintaining or increasing average fill rates. This improvementreduces a retailer's cost of goods sold by ~1.2%, which is significant in the low profitmargin grocery industry. Furthermore, these savings could have been achieved without VMI.