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Supply chain network redesign problem for major beverage organization in ASEAN region

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Gajanan B. Panchal
Gajanan B. Panchal
Gajanan B. Panchal
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Hassan Mirzahosseinian
Hassan Mirzahosseinian
Hassan Mirzahosseinian
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Sunil Tiwari
Sunil Tiwari
Sunil Tiwari
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Ajay Kumar
Ajay Kumar
Ajay Kumar
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Abstract and Figures

Global supply chains engage in economic exchanges and flows of capital across borders. The free flow of economic goods opens opportunities for organizations to optimize supply chains across global networks and develop socially embedded interdependent relationships. This study explores issues related to multi-echelon supply chains and the effect of economic integration on a major beverage company’s distribution in the emerging Association of Southeast Asian Nations (ASEAN) Economic Community (AEC). Case-based modeling is conducted to resolve discrepancies in perceptions of supply chain network formation between academic research and industry. This paper determines the network configuration involving minimum gross cost while considering the impacts of barriers to resource accessibility and external economic decisions on infrastructure in a real-world supply chain network where end products of in-house manufacturing are acquired from external sources and incorporated in warehouses. A mixed-integer linear programming model was developed to design a multi-stage supply chain network using ILOG LOGIC NET. The model explores location and capacity selection for plants and warehouses in parallel with capacity selection for suppliers and transportation in the AEC, and we determine the optimal flow of products and product families through the network medium. Three different scenarios were evaluated to obtain differing resolutions that can empower decision-makers to understand influences on overall supply chain networks based on futuristic development preferences and regional economic integration.
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Annals of Operations Research (2023) 324:1067–1098
https://doi.org/10.1007/s10479-022-04571-0
ORIGINAL RESEARCH
Supply chain network redesign problem for major beverage
organization in ASEAN region
Gajanan B. Panchal1·Hassan Mirzahosseinian2·Sunil Tiwari3·Ajay Kumar4·
Sachin Kumar Mangla5
Accepted: 25 January 2022 / Published online: 16 February 2022
© The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2022
Abstract
Global supply chains engage in economic exchanges and flows of capital across borders. The
free flow of economic goods opens opportunities for organizations to optimize supply chains
across global networks and develop socially embedded interdependent relationships. This
study explores issues related to multi-echelon supply chains and the effect of economic inte-
gration on a major beverage company’s distribution in the emerging Association of Southeast
Asian Nations (ASEAN) Economic Community (AEC). Case-based modeling is conducted
to resolve discrepancies in perceptions of supply chain network formation between academic
research and industry. This paper determines the network configuration involving minimum
gross cost while considering the impacts of barriers to resource accessibility and external eco-
nomic decisions on infrastructure in a real-world supply chain network where end products of
in-house manufacturing are acquired from external sources and incorporated in warehouses.
A mixed-integer linear programming model was developed to design a multi-stage supply
chain network using ILOG LOGIC NET. The model explores location and capacity selection
for plants and warehouses in parallel with capacity selection for suppliers and transportation
in the AEC, and we determine the optimal flow of products and product families through
the network medium. Three different scenarios were evaluated to obtain differing resolutions
BAjay Kumar
akumar@em-lyon.com
Gajanan B. Panchal
g.panchal@aston.ac.uk
Hassan Mirzahosseinian
hmirza@supchainera.com
Sunil Tiwari
sunil.tiwari047@gmail.com
Sachin Kumar Mangla
sachin.kumar@plymouth.ac.uk
1Aston Business School, Aston University, Birmingham, UK
2SupChainEra Company, Melbourne, Victoria 3128, Australia
3ESSCA School of Management, Lyon, France
4EMLYON Business School, Ecully, France
5Jindal Global Business School, O P Jindal Global University, Sonepat, Haryana, India
123
Content courtesy of Springer Nature, terms of use apply. Rights reserved.
... A beverage production firm based in China. is utilized to verify the model. A MILP approach was created by Panchal et al. (2023) to construct a multi-stage SCN utilizing ILOG LOGIC NET. In addition to exploring plant and warehouse capacity selection, the model also examines supplier and transportation capacity choices within the Economic Community. ...
A resilient and sustainable supply chain network design: a case study in beverage industry
Article
Full-text available
  • Dec 2024
  • Environ Dev Sustain
The beverage market in Iran has witnessed a surge in competition as renowned brands have entered the industry in recent years. This heightened competition underscores the significance of developing a competent and well-designed supply chain network (SCN). Furthermore, the prevalence of ecological and societal concerns in recent years has significantly amplified the urgency to adopt sustainable practices. Therefore, this study creates a mathematical framework to design a Resilient and Sustainable Supply Chain Network (RSSCN) for the beverage industry based on a real case study. A Multi-Objective Mixed -Integer Linear Programming (MOMILP) model is created to address the location-allocation-inventory decisions within the proposed SCN. The problem encompasses a range of multiple decisions, encompassing the site of factories and Distribution Centers (DCs) to be founded, managing the material flow across the system, deciding on inventory level and shortages, and assigning established centers to each other. The model was addressed employing the Epsilon-Constraint Method (ECM) to handle the multiple objectives of sustainable development, which include reducing overall expenses, lowering CO2{\text{CO}}_{2} emissions, and increasing total employment opportunities simultaneously. Finally, conducting multiple sensitivity analyses provided several managerial insights that helped mangers make informed decisions. According to the sensitivity analysis, the implementation of backup supplier strategy significantly reduced total cost under disruption risk, demonstrating the credibility and effectiveness of this method.
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... The optimal location, capacity, and number of all entities should be determined carefully since these strategic decisions significantly affect the overall performance of the forward and reverse logistics networks. Specifically, in the plastic beverage industry, the optimal location of different facilities like recycling centers (Pamucar, Ebadi Torkayesh, Deveci, & Simic, 2022), collection centers (Ali, Paksoy, Torgul, & Kaur, 2020), recovery centers (Paydar & Olfati, 2018), manufacturers and production lines (Panchal, Mirzahosseinian, Tiwari, Kumar, & Mangla, 2023), suppliers (Babbar & Amin, 2018;Yazdani et al., 2021), and beverage shops (Lin et al., 2021) should be determined. When determining the optimal locations, all possible effective factors − such as total costs, proximity to communities, green criteria, environmental effects, and contributions to social development − should be considered. ...
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... (2013) proposed a linear model to design a GCLSC by considering transfer price and net profit between two countries. Panchal et al. (2022) minimized the gross cost of a GSCN considering the impacts of barriers to resource accessibility and external economic decisions on infrastructure through a MILP model. Not only these research works, but all the aforementioned studies, except for what Hasani (2021) has done, ignore the uncertainty, despite its importance (Saraeian et al. 2019). ...
Closing the loop of a global supply chain through a robust optimal decentralized decision support system
Article
Full-text available
  • Oct 2022
  • ENVIRON SCI POLLUT R
This paper presents a novel decentralized decision support system to optimally design a general global closed-loop supply chain. This is done through an original risk-based robust mixed-integer linear programming that is formulated based on an initial uncertain bi-level programming. Addressing the decision-maker’s (DM’s) attitude toward risk, a scenario-based conditional value-at-risk is used to deal with demand and return uncertainty. Also, the Karush–Kuhn–Tucker (KKT) conditions are employed to transform the model into its single-level counterpart. The results obtained from solving a numerical example through the proposed framework are compared with those of the corresponding centralized system, which is formulated through deterministic multi-objective programming and solved by the Lp-metric method. The results show that the use of the proposed framework improves the robustness of profit, income, and cost by about 28%, 34%, and 36% on average. However, a more conservative DM faces a larger cost of robustness than an optimistic DM while experiencing a more significant improvement in the system responsiveness. Using the proposed framework, the manager can measure the advantages, disadvantages, and consequences of their decisions before their actual implementation. This is because the model is capable of establishing fundamental trade-offs among risk, cost, profit, income, robustness, and responsiveness according to the DM’s attitude toward risk.
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Resilience in the Face of Uncertainty: Navigating Supply Chain Challenges Through Proactive Risk Surveillance and Mitigation Strategies among SMEs in ASEAN countries
Article
Full-text available
  • Sep 2024
Background Supply chain risk management is crucial for the consumer products industry due to its vulnerability to uncertainties and risks. This study investigates the relationship between supply chain risks and performance among SMEs in the ASEAN countries. Supply chain performance, defined as meeting end-customer demands, involves ensuring commodity availability, on-time deliveries, and maintaining sufficient inventory and capacity across organizational boundaries from raw materials to the final consumer. Methods The study utilized a sample of 385 entrepreneurs from the consumer products industry in ASEAN countries. The research was analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to establish the correlation between supply chain performance and risks. Factors related to the ASEAN Economic Community (AEC) for economic integration and regional trade agreements were incorporated to understand the diverse economic development, infrastructure, and regulatory environments across nations. Results The analysis revealed a strong correlation between supply chain risks and performance. Entrepreneurs in the consumer products industry should collaborate closely with governmental organizations to address the unique challenges posed by regulatory landscapes, crossborder logistics, and geopolitical risks within the ASEAN region. Adapting to cultural nuances and market variations, along with optimizing logistics and infrastructure, are crucial for successful supply chain risk management.
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A Distributionally Robust Fuzzy Optimization Approach for Resilient Manufacturing Supply Chain Network Design: An RCEP Perspective
Article
  • Jan 2023
Recent changes in trade barriers and increasing uncertainties in trade policies have forced companies to rethink their optimal supply chain settings. This paper studies the impact of the Regional Comprehensive Economic Partnership (RCEP) agreement, particularly the cumulative rules of origin, on the resilient manufacturing supply chain network design problem with demand uncertainty. Three resilience strategies, namely multiple sourcing, capacity redundancy, and technology innovation, are employed to improve supply chain resilience. Using type-2 fuzzy theory, we develop a distributionally robust fuzzy optimization (DRFO) model to address the proposed problem. In this model, the demand is represented as a parametric interval-valued fuzzy variable and its associated uncertainty distribution set. In terms of the model's tractability, we analyze the computational issues of the credibility constraint and reformulate the DRFO model into a computationally tractable mixed-integer linear program. Finally, we apply the proposed model to a real-life automotive supply chain case and demonstrate its superiority in providing uncertainty-immunized solutions. Our analysis reveals that the RCEP agreement may deepen the manufacturing supply chain networks in Asia-Pacific and promote their integration and localization. Also, we find that using any resilience strategy or a mixture of them can increase supply chain's resilient performance while decreasing costs against disruptions.
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Decision support for selecting the optimal product unpacking location in a retail supply chain
Article
Full-text available
  • Oct 2016
  • EUR J OPER RES
The purpose of this research is to investigate the optimal product unpacking location in a bricks-and-mortar grocery retail supply chain. Retail companies increasingly are investing in unpacking operations at their distribution centres (DC). Given the opportunity to unpack at the DC requires a decision as to which products should be selected for unpacking at the DC and which should be shipped to stores in a case pack (CP) or outer pack provided by the supplier. The combined unpacking and unit size decision is evaluated by focusing on the relevant costs at the DC and in-store, i.e., picking in the DC, unpacking either in the DC or in the store, shelf stacking in the store and refilling from the backroom. For replenishing stores, an (R, s, nQ) inventory policy is considered when using the supplier CP and an (R, s, S) policy when the product is unpacked at the DC. Expressions are developed to quantify the relevant volumes and to calculate the corresponding costs on which the unpacking decision is based. A numerical example with empirical data from a European modern retailer demonstrates that unpacking a subset of the stock keeping units (SKUs) at the DC results in a significant cost reduction potential of 8% compared to no unpacking at the DC. The example shows that DC unpacking can generally be highly favourable for a large share of products.
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Supply Chain Network Redesign: A Technical Note on Optimising Financial Performance
Article
  • Apr 2019
Supply chain network (SCN) redesign is a strategic decision that requires the consideration of several important financial aspects. A review of the supply chain network design (SCND) literature shows that most of the provided solutions lack the measurement and incorporation of the company's financial performance. This study extends the SCN redesign model, introduced by Jahani et al. (2018), in order to allow financial performance optimization instead of profit maximization. The model uses essential accounts existing in the basic financial statements of an SCN company to delineate how the strategic financial considerations can influence the network structure and its operational flows. It ascertains the future financial position of the company, as well as the optimal levels of loans and the proportion of available cash required for financing the new design. We examine the applicability of the model by consolidating financial data with the case study used in Jahani et al. (2018). We evaluate the resulting financial ratios of the new model with existing ratios aimed at representing the reliability of the model and introducing future targets. This study offers several managerial insights. For instance, consideration of inventory values as a current asset in designing an SCN leads to a realistic design aligned with financial statements that are also reportable to creditors and investors.
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The impact of Brexit on designing a material-based global supply chain network for Asian manufacturers
Article
  • Apr 2019
  • Manag Environ Qual Int J
Purpose The purpose of this paper is to investigate effects on global supply chain reconfigured in the customs duty rate of parts and specific material types brought about by Brexit and the Trans-Pacific Partnership (TPP). Design/methodology/approach The supply chain network is modeled and formulated using mixed integer programming. Numerical experiments are conducted using bill of materials with information such as the procurement cost of each part, 3D-CAD and an industry census. Findings The experiments indicates that if the customs duty rate increases by Brexit, manufacturers would be necessary to restructure supply chain configuration and locate the domestic factory and market. Additionally, when the UK leaves the EU and joins the TPP, there is a case where the total cost decreases in the global supply chain network compared to the baseline without Brexit. Therefore, it is reasonable for the UK to join the TPP. Practical implications The study shows how new trading rules from non-partnership countries can critically disrupt existing global supply chain equilibrium. Asian manufacturers should evaluate a move to more local sourcing, opening new facilities and setting up warehouses to stock finished goods or raw materials in different trading areas to overcome any barriers to the goods movement. Originality/value This study enables us to quantitatively evaluate what there are opportunities or cost increasing risks by the selection of supply chain configuration for Asian manufacturers by political and economic factors of each country, such as Brexit and participation in TPP.
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A multi-stage supply chain network design problem with in-house production and partial product outsourcing
Article
  • Feb 2019
  • APPL MATH MODEL
We propose a mixed-integer linear programming model for a novel multi-stage supply chain network design problem. Our model integrates location and capacity choices for plants and warehouses with supplier and transportation mode selection, and the distribution of multiple products through the network. The aim is to identify the network configuration with the least total cost subject to side constraints related to resource availability, technological conditions, and customer service level requirements. In addition to in-house manufacturing, end products may also be purchased from external sources and consolidated in warehouses. Therefore, our model identifies the best mix between in-house production and product outsourcing. To measure the impact of this strategy, we further present two additional formulations for alternative network design approaches that do not include partial product outsourcing. Several classes of valid inequalities tailored to the problems at hand are also proposed. We test our models on randomly generated instances and analyze the trade-offs achie ved by integrating partial outsourcing into the design of a supply chain network against a pure in-house manufacturing strategy, and the extent to which it may not be economically attractive to provide full demand coverage.
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Supply Chain Network Redesign with Demand and Price Uncertainty
Article
  • Aug 2018
  • INT J PROD ECON
When new products are introduced into a supply chain, the existing logistics may no longer optimally meet the objectives of the enterprise. This paper provides an analytical approach to redesigning a supply chain network (SCN), considering its current infrastructure. While aiming to maximise total profit, we take into consideration the demand and price uncertainty and their correlation as two important risk factors, and formulate them using associated Brownian motions employed in a real options pricing approach. Our model captures multiple periods and cash flow aspects through a non-linear structure. In the solution approach, we apply a novel piecewise linear conversion. Our theoretical model is complemented by a realistic case study from the Australian cement industry. We demonstrate significant improvements in the financial position of the company after redesigning its SCN. For instance, SCN redesign increases total profit by 49%, while the profit from the existing product increases by 23%. The results also indicate that ignoring the effect of the correlation leads to profit overestimation.
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Closed-loop supply chain network design with multiple transportation modes under stochastic demand and uncertain carbon tax
Article
  • Oct 2017
  • INT J PROD ECON
We optimize the design of a closed-loop supply chain network that encompasses flows in both forward and reverse directions and is subject to uncertainty in demands for both new and returned products. The model also accommodates a carbon tax with tax rate uncertainty. The proposed model is a three-stage hybrid robust/stochastic program that combines probabilistic scenarios for the demands and return quantities with uncertainty sets for the carbon tax rates. The first stage decisions are facility investments, the second stage concerns the plan for distributing new and collecting returned products after realization of demands and returns, and the numbers of transportation units of various modes are the third stage decisions. The second- and third-stage decisions may adjust to the realization of the carbon tax rate. For computational tractability, we restrict them to be affine functions of the carbon tax rate. Benders cuts are generated using recent duality developments for robust linear programs. Computational results show that adjusting product flows to the tax rate provides negligible benefit, but the ability to adjust transportation mode capacities can substitute for building additional facilities as a way to respond to carbon tax uncertainty.
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Halal integrity in the food supply chain
Article
  • Jan 2017
  • BRIT FOOD J
Purpose This paper argues that there is an absence of halal integrity within the conventional stages of a food chain. This paper adapts the understanding of the different stages and argues the need to develop a critical consciousness for halal integrity within the food chain to address the needs of the ever-growing Muslim consumers’ market. The purpose of this paper is to propose a definition of halal integrity using farm to fork and global food supply chain models. Design/methodology/approach The study includes a review of priori literature and media reports regarding cross-contamination of food products with haram (forbidden) components. This background will be used to conceptualise halal integrity using farm to fork and global supply chain models. Findings Different interpretations of halal – what is permitted and what is prohibited – exist for the different schools of Islamic legal thought and within the customs of different countries. In order to ensure that food production is embracive of the religious needs of the global Muslim customer market, this paper utilises the farm to fork and global supply chain models to foster a critical awareness of halal needs. Halal integrity should be clearly presenting the details of the halal status of the product and assuring that the requirements for halal as stated are met. Halal integrity not only deals with permitted and prohibited foods, but that the halal status of the food products (i.e. from raw materials until it reaches the consumers) should not be breached (i.e. no cross-contamination with haram products/methods and no ill intents). A formal definition of halal integrity has been proposed. Research limitations/implications The SWOT analyses serve as a guideline as the analysis done may be outdated as the environments are constantly changing. Originality/value This research although academic is meant to have a real value in improving the integrity of the halal food supply chain, providing value to the food industry, to countries that are concerned about this supply chain and to Muslim consumers. Halal integrity is crucial to the success of the emerging halal market.
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A facility location model for global closed-loop supply chain network design
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  • Aug 2016
  • APPL MATH MODEL
Forward and reverse supply chains form a closed-loop supply chain. In this paper, a mathematical model is proposed for a closed-loop supply chain network by considering global factors, including exchange rates and customs duties. The model is a multi-objective mixed-integer linear programming model under uncertain demand. A solution approach based on fuzzy programming is developed for solving the optimization problem. The model is then applied in a network, which is located in Southwestern Ontario, Canada. A sensitivity analysis is provided to validate the model. This model considers global factors, multi-objectives, and uncertainty simultaneously in a closed-loop supply chain network.
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Recent Issues in International Supply Chain Network Design—Economic Partnership Modeling
Chapter
  • Sep 2016
In this paper, we present a supply chain network design technique with a preferential tariff under an economic partnership agreement. The proposed model has constraints to judge whether a preferential tariff applies under two types of rules which identify the product origin country. This model can estimate the cost reduction amount under preferential tariff utilization, and design the minimum total cost supply chain network. We show results of some case studies of factory location selection under the assumption that applicable new tariff schemes will go into effect and labor cost will rise remarkably in the future. These results suggest two types of strategies: selecting the lowest location and selecting high-cost locations for which a preferential tariff applies. It is confirmed that the proposed model can effectively perform such a quantitative evaluation.
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