Integrated Decision Support for a Competitive Supply Chain: Application to FMCG Company

Gao Yu

Abstract

Competitions among businesses has increasingly becoming a race of their supply chains. Two levels of perspectives are considered when constructing a competitive supply chain. First at managerial level, an appropriate supply chain strategy that befits organizational strategy and product life cycle need to be chosen. Then at domain expert level, daily operations that realize chosen supply chain strategy need to be planned. However, reviewed literatures have shown an existing gap between chosen supply chain strategy and its operationalization, which has led to inefficiency of supply chains. With the purpose of bridging the gap and developing a practical recommendation that incorporates various perspectives in designing a competitive supply chain, this thesis aims to construct an integrated decision support tool with an iterative process to address and reconcile the differences in supply chain strategy and its operationalization. The iterative process decomposes supply chain design into two levels, one reflecting managerial strategy choice and the other reflecting domain experts’ corresponding operational planning. At strategy evaluation level, due to complexity and varied structures of supply chains, Analytical Hierarchy Process (AHP) and Analytical Network Process (ANP) among Multi-Criteria Decision Making (MCDM) strategies are then selected as the most appropriate modeling strategy: firstly for their ability of capturing supply chain complexity, and secondly for their differences - AHP being a restrictive hierarchical structure and does not reflect inter-dependency and feedback effects among elements while ANP does. This thesis thus proposes a modeling procedure with comparative use of both methods for addressing specificity of different supply chain structures. At operational level, Mixed Integer Linear Programming (MILP) based optimization model is utilized, to depict daily operational planning constraints. Output of the optimization model then serves as reference for strategy adjustment via MCDM model. The iterative process continues until a balanced and optimal supply chain paradigm output is agreed by all stakeholders of the supply chain. The model is then applied specifically to Fast Moving Consumer Goods (FMCG) industry to demonstrate the process and leagile supply chain is recommended as an integrated output. The tool applicable and customizable to other industries as well after modification to some model components.