Poster Presentation at MIT
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The document proposes implementing a hub-and-spoke distribution model for a global pharmaceutical company to reduce lead times and improve responsiveness. It analyzes how alternative operating policies and supply chain parameters would impact performance of an Asia Pacific distribution hub. A simulation tool would allow testing different planning parameters and policies, such as inventory levels, minimum order quantities, and safety stock. The hub aims to receive products with at least 10% remaining shelf life above affiliates' minimum to reduce obsolescence risks. Demand restriction for low volume products safety stock is also proposed.
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Poster Presentation at MIT
- 1. Sneha Susan JacobAgnes Maina THE BIG HUB THEORY!Student: Agnes Maina, MSCM 2016 Student: Sneha Susan Jacob, MSCM 2016 Advisor: Dr. David Gonsalvez Sponsor: A Global Pharmaceutical Company Lead Time reduction and faster responsiveness to demand volatility Hub-and-spoke model was born from industrys efforts to develop more efficient networks. Benchmarking by the company has shown that leading competitors have started developing a Hub. Our Hub and Spoke Mental Model What is the impact of alternative operating policies and supply chain parameters on the APAC hub supply chain performance? Develop an inventory control system to enable us infer the operations of the secondary packaging hub A proposed hub system evaluated under various operating scenarios by building a model of the product supply chain under analysis, identifying key supply chain parameters and alternative operating policies. A model and a tool that allows to simulate the expected output (stock levels, write-off risks and service level) of alternative set of planning parameters and policies. Apply the model to the pharmaceutical sector in general where there is a set shelf life and set legal restrictions around the residual shelf life. The overall lead-time must be reduced from the current 90 days for all products and also reduce the review period for the temperature controlled products; product MD, R and X so as to benefits from lower costs at any given CSL. The hub needs to receive the product with an RSL of at least 10% above the affiliates minimum acceptable RSL. This would aid reduce chances of the products becoming obsolete or unqualified for importation to the affiliates. Implementation of demand restriction on Safety Stock the low volume products. Methodology The Problem Motivation / Background Key Question / Hypothesis Relevant Literature Results Expected Contribution Current situation: Products are transported directly from the manufacturer to the country where they are required. Implication: This in turn leads to long lead times which hinders the countries to attend to urgent or unexpected demand. January 2016 Poster Session And a million other authors Variables Demand Inventory Policy MOQ, Safety Stock Lead Time 8 10 12 14 16 18 20 22 24 26 28 30 89.5% 90.0% 90.5% 91.0% 91.5% 92.0% 92.5% 93.0% 93.5% 94.0% 94.5% 95.0% 95.5% 96.0% 96.5% 97.0% 97.5% 98.0% 98.5% 99.0% 99.5% 99.9% Days Cycle Service Level Impact of Demand Restriction on Safety Stock (Days): Product MD Demand Restricted at 1 Demand Restricted at 2 Unrestricted Demand