Supply Chain Modeling and Design

Supply chain management is concerned with the efficient integration of suppliers, manufacturers, warehouses and stores so that merchandise is produced and distributed in the right quantities, to the right locations, and at the right time.  Thus, a large focus on my research is on how to model and design supply chains.  I have focused much of my research on logistics, which is concerned with the efficient flow and storage of goods from point of origin to point of consumption.  I like to think of “Logistics” as the “verbs” that make the supply chain work.  Check out this link to learn more about a career and new research areas in logistics.

I am a firm believer that now is an important and fun time to be involved with supply chain and logistics.  This is because supply chain and logistics play a significant force economically (logistics and transportation made up 8.5% of the US’s GDP in 2012), environmentally (as the movements in the supply chain are a heavy generator of greenhouse gasses), and socially (we as consumers are demanding that everything should be delivered quickly).  Many of the biggest tech companies have an emphasis on the supply chain (think Amazon, Uber, Google).

It’s also a super disruptive time to be in supply chain design and operations.  Modern distribution systems need to fulfill a wide variety of requests quickly with little warning in small units to many dispersed locations at low costs.  This is fundamentally different than yesterday’s demand, which aggregated at fixed (store) locations.  Thus, today’s supply chains are optimized for yesterday’s customers.

RED Talk Hendler and Pazour FINAL

To close the gap between current supply chain operations and customer expectations, our research team rethinks supply chain design.

We are exploring creative solutions around on-demand warehousing and crowdsourced deliveries, in which platform marketplaces provide access to resources (when and where they are needed), rather than owning them.  This creates a dynamic supply network, able to respond to changing demand requirements.  On-demand P2P Logistics systems use internet-based platforms to provide wide-reach visibility into untapped resource capacity.  But, such systems are inherently more complex than traditional systems. To address these challenges, we are researching new network design models to capture on-demand business models and will use these models to quantity the benefit in terms of access to scale, reduced commitment granularity, and reduced capacity granularity.    On-demand peer-to-peer logistics systems use a business model for the movement and storage of goods that matches independent supply resources (warehouse space, truck space, delivery services) to requests on demand.  Examples include Flexe, Cargomatic, Instacart, Flexport, among others.

 

Here’s a WERC webinar with me talking about the characteristics of these systems and explaining how these systems vary from traditional warehousing and logistic systems.

For a quick overview,  I recommend checking out Flexe’s videos.  Through a NSF CAREER grant, we are also conducting basic research on how best to provide a set of decentralized suppliers choice to entice them to provide access to their resources on-demand. By tapping into underutilized supply capacity, supplier choice can increase participation – and thus capacity –  and provides agility through more flexible use of suppliers.  This can improve e-commerce profitability and enable a new on-demand volunteer base.  Our research team has partnered with community nonprofits to test how on-demand grocery delivery systems for mobility-restricted clients can help address the needs of residents living in food deserts.

I discuss why I find on-demand peer-to-peer logistics systems interesting and challenging here:

Jennifer_Pazour

I discuss my research on-demand logistics systems in this youtube video.

Online shopping is becoming more and more popular. However, the brick-and-mortar store customer has not disappeared. Retail chains need to address the growing set of online shoppers while still satisfying the in-store customer experience.  I am a firm believer that retail stores will be around in the future, but they will look, operation, and be designed to be drastically different than the ones we are accustomed to today.

One way to serve both customers is through the use of “ship-from-store” methods, where online orders are fulfilled using inventory from a brick-and-mortar store.  One of advantage that ship-from-store provides is the ability to virtually pool inventory, making a brick-and-mortar store’s inventory available to online customers.  This can reduce stockouts and markdowns, which are two leading factors that decrease a retail stores profit margin.  Another benefit of ship-from-store is faster delivery times, as stores are typically located closer to customers than distribution centers.  These benefits come with a more complex fulfillment strategy and a number of interesting research questions exists.  If you are interested in learning more, check out Kurt Salmon, Winning the ship from store battle – strategies and tactics.

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