Establishing supply chains that are responsible and fair to their stakeholders is a daunting task. The Center for Sustainable Value Networks (CSVN), addresses questions that relate directly to supply chain responsibility like:
- What is responsible sourcing?
- What changes can traceability drive?
- How much traceability is good enough?
- How does establishing traceability and transparency support sustainability?
The goal of CSVN is to help design responsible Supply Chains for Consumers, M&Cs, smaller stakeholders, NGO’s and Government Organizations fostering participation from all. Central to this the issues that need to be addressed are: Supply Chain Transparency, Traceability, Accountability and Complexity.
Through research and industry partnerships we explore solutions by trying to answer questions like:
- How can we establish economies of scale with small disparate Independent stakeholders?
- Can innovation help enable cost sharing?
- Can all stakeholders collaborate to increase value across the chain?
- How can the rewards be redistributed more equitably across the chain?
The figure below illustrates the example of a palm kernel oil supply chain that sources upstream from various suppliers and distributor neworks. The product that is the palm fruit or the fresh fruit bunch (FFB) gets transformed to crude palm oil (CPO) and palm kernels that are further sourced downstream to produce palm kernel oil. PKO gets transformed to various oleo-chemicals and glycerin downstream.
The Center for Sustainable Value networks has undertaken various projects, a brief summary is highlighted below. For details please feel free to reach out the Director for CSVN at aata at misi dot edu dot my.
Sponsor: A Multinational Oil Palm Plantation Company
ISHFs is defined as smallholders with farm sizes of less than 40 ha and they constitutes 16% of the total oil palm planted area in 2015 in Malaysia. Within this segment are ISHFs with farm sizes of 1 – 4 ha. This thesis investigates the financial sustainability of these ISHFs with various FFB yields and grades, input costs, interest rates together with poverty line income (PLI) and certification costs under both average FFB prices and variable FFB prices. Financial sustainability is measured using Net Present Value (NPV) and cash flow. For variable FFB prices, Monte Carlo simulation is used to develop probability curves for financial sustainability. Results show that high yields are an important prerequisite for financial sustainability supported by FFB Grade A and good management of costs. Certification should only be considered after financial sustainability is achieved.
1. Certification premiums are low for ISHFs with small farm sizes and is not an incentive.
2. Interest rates have a minimal effect on the financial sustainability of the ISHF due to low economy of scale.
3. Farm sizes with yields of 10 tons/ha/yr and less will be financially unsustainable for all farm sizes and FFB grades.
4. High yields with minimum farm size 3.2 ha is an important prerequisite for high probability of financial sustainability due to variability in FFB prices.
5. High yields for financial sustainability must be supported by targeted government policies of training, technical support and accelerated replanting of DxP supported by the implementation of GAP, good cost management and financial assistance.
6. Certification through group certification should only be implemented after an ISHF achieves financial sustainability. MSPO is the preferred certification for these ISHFs due to lower entry barriers.
Sponsor: A Multinational Automotive Battery Distributor
This research presents a dynamic approach for selection among forecasting models. The context of this work is an automotive battery supplier in Malaysia. Using a nonlinear optimization, individual forecasting techniques were combined by assigning weights to each forecasting method to achieve a set of different combination forecasts. By developing an algorithm that allows switching between different forecasting models in every new period, a robust forecasting method is devised which has proved to perform better in case of volatile demand forecasts like the case of automotive batteries in the present context.
1. It is more beneficial for a firm to use a combination of multiple forecasts rather than selecting a single best forecast.
2. Combined forecasts using optimal weights will give better forecast accuracy than simple average of forecasts
Sponsor: A Multinational Apparel Manufacturing Company
This research provides insights into root causes that are leading to missed on-time deliveries in apparel manufacturing industries. On time delivery is a critical parameter to measure Make to Order firm’s supply chain performance. From procurement of raw materials to planning of production systems, all interlinked processes play a crucial role in meeting promised delivery dates. Through extensive literature review and industry visits pertaining to make to order apparel manufacturing systems, reasons for production delays are identified. Simulation studies to study the impact of the identified root causes on final on-time delivery performance are performed and the results are analyzed to make the recommendations.
1. Delays at beginning and end for various processes are analyzed and found that the majority of the delays are contributed by the downstream processes (wet processing and end packing).
2. Unused or non-value added empty days in between the current processes are quantified and their impact on overall delays are analyzed.
3. The Production environment is simulated to study the impact of reducing identified delays on the final on-time delivery performance. These analyses confirm that more significant delays are caused by wet processing and end packing compared to sewing.
Sponsor: A Multinational Food & beverage Company
This research is performed to identify key performance indicators (KPIs) for Food and Beverage (F&B) supply chains at a strategic decision-making level. By interviewing subject matter experts from academia and a global F&B company in China, this research provides a framework of prioritizing KPIs for F&B supply chains. The results obtained from the methodology have been analyzed to provide recommendations to the sponsor about the importance and implementation along with the ownership of the KPIs with the help of a RACI (Responsibility, Accountability, Consulted, Informed) responsibility matrix.
1. Upstream traceability to ensure “Sustainable Sourcing” and downstream tracking until the product reaches the customer in the best quality and in appropriate time to ensure “Flexibility of Service” and “Food Security” are KPIs identified as critical for F&B supply chains.
2. Sourcing, followed by CRM, has been identified as areas most critical to focus upon for performance improvement, for “Coffee Cup”.
3. The proposed framework and methodology can be used at any stage of supply chain to identify important KPIs critical for supply chain performance evaluation and improvement.
Sponsor: A Multinational Oil Palm Plantation Company
Once a company goes to palm oil supply chain, it goes incredibly complex. This thesis targets to study the upstream supply chain in Malaysia focusing on a simple dealer model. Players in the upstream include: Independent Smallholder Farmers (ISHFs), Collection Centers (CCs), Dealers and Mills. In this project, value chain mapping and quantitative analysis were used. Results demonstrated the complexity of the supply chain to trace backward sustainability, and identified inefficiencies residing between ISHF and mill. Ways to avoid these inefficiencies and to improve the system were presented.
1. Higher value created to the FFB product and most profit made by the ISHF. However, ISHF and mills have a less equitable share of the pie and the system seems to be biased toward the CC.
2. RSPO certification would create a win-win situation for the ISHF and dealer: ISHF would face an increase of at least 11% in his yearly profit compared to 18% for the dealer.
3. The variability in the monthly supply and an increased volume of supply would not impact the overall working process of the system and specifically the mills.
Sponsor: A Multinational Fabric Manufacturing Company
This work is aimed to design a set of minimum-cost vehicle routes, originating
from material suppliers and terminating at sewing plants for the sponsor’s inbound logistics network within the Southern China and ASEAN region. This thesis aims to solve a multi-vehicle capacitated static and deterministic Pickup and Delivery Problem (PDP) with time windows and multiple depots using a scientific mathematical approach to vehicle routing so that routing decisions are optimal with respect to costs.
1. This wok proposes a 2-index Mixed Integer Linear Program (MILP) based multi-vehicle formulation for Pick up and Delivery problems (PDP) that makes the model implementable in spreadsheet environments like MS Excel. Extant literature is lacking in exact 2-index MILP based multi-vehicle formulations for PDP thus the model proposed in this work helps bridge this gap in the literature.
2. The decision to completely eliminate or bypass a consolidation or deconsolidation hub can result in a more optimal solution for cross-boarder sourcing on certain lanes. Sponsor should explore bypassing the Bangkok hub during cross-border sourcing for the China-Thailand lane, since there is only one plant in Thailand and no deconsolidation is required. Sponsor can liaise with
appropriate authority to complete customs check at checkpoints close to the Laos -Thailand border instead of the Bangkok hub. This will eliminate an entire level of network thereby saving time and costs.
Sponsor: An International FMCG Company
Chocolate Co. is a global fast moving consumer goods (FMCG) player. Recent aggressive growth strategy through acquisitions and resulting integration efforts have historically shifted focus from organic growth. Now Chocolate Co. would like to develop an effective collaboration model to engage with its customers. Traditionally the relationships with the customers have been on a transactional basis: receiving and delivering orders. Existing level of relationships has been creating a competitive disadvantage since other competitors have been collaborating with the customers to achieve greater profitability and deeper relationships. Therefore this research explores three key questions:
1. How should customer segmentation be conducted from a supply chain management point of view?
2. What collaboration levels are appropriate for different segments?
3. What are the driving forces and resisting forces of creating customer buy-in for collaboration and how do they interact with each other?
1. A segmentation approach covering both financial and non-financial metrics developed and implemented.
2. Customer segments matched with different collaboration levels using Delta Model framework, a strategy framework focusing on customers.
3. A methodology for system dynamic analysis of qualitative data is proposed, validated and used for analysis of creating customer buy-in.
4. Simulation results: Investment in supply chain training and people skills is key and complementor benefits help bridge gaps in creating buy-in.
Sponsor: A Multinational Food & beverage Company
In a fragmented cold chain industry in developing countries, how should a shipper protect integrity of its products and brands while supporting multiple shipment types, and supply & demand surges? The objective of the thesis is to identify the dynamics behind fragmented cold chain industry, and conceptualize and build a framework to evaluate Cold Chain Service Providers (CCSP) in such a fragmented industry. The framework facilitates evaluation of CCSP in various dimensions of Strategic, Tactical and Operational fit with an organization and suggests a systematic approach to monitor performance of CCSP using key metrics and parameters.
1. In a fragmented market, evaluate Cold Chain Service Providers (CCSP) not just on the basis on Operational fit but also on Tactical and Strategic fit assessment.
2. Use of different levels (strategic Tactical and operational) of evaluation framework for evaluating CCSP is recommended
3. Strategic and Tactical fit together comprise 55% of total weight, suggesting that sufficient focus on Strategic & Tactical fit is required evaluating CCSP in fragmented industry.
4. IT capability and Temperature & Service Consistency are more important than pricing parameters.
5. Significant opportunity could be find in the areas of Cost Management, and Network Optimization as Shipper give higher weightage to price parameters, extent of express services and omni-channel needs.
Sponsor: Local and International Non Government Organization
As India gears up for benchmark production of 377 Million tons of vegetables in year 2021, high wastage poses a substantial threat to Indian vegetable industry. Moreover, being an agriculture economy, farmers in India continue to live on meager resources for their livelihood. One of the reasons for this is the involvement of a number of middlemen in vegetable value chain. These middlemen help set the prices in market and are key decision maker in the trading activity with little profit for farmers. The analysis finds that there is a disproportionate distribution of value added and profits reaped throughout the value chain. Farmers add maximum value to the produce, but their share in total profit is not at the par with value added. This is further aggravated by high wastages, which further reduce the profit for farmers. This research identifies and explores control points for implementation of cold storages in the vegetable value chain, to help increase the overall profit for stakeholders involved, reduce the overall wastage, and stimulate a fairer distribution of profit for farmers.
1. Of the various channels, the channel involving fewer middlemen allow higher overall margins particularly for farmers
2. Two most feasible control points for Cold Storages seem to be at:
- Village/Block level: This could be facilitated by the government and strengthened by the formation of cooperatives
- District level: In the case the investment by district level middlemen in groups of 4 to 5 can help justify the intervention
3. The channel involving fewer number of middlemen will have highest Return on Investment in Cold Storages
Sponsor: A Low Cost Flight Carrier
Inflight food sales have become an important revenue source for low cost airlines where demand forecasting is play a critical role in profitability. By creating a new and improved forecasting method, the research is aiming for reduced waste and lost sales, thus will increase the business profitability.
1. The two channels of food service, Pre-Book Meal and Inflight sales, have different demand pool. Thus capturing demand appropriately from both channels will greatly increase the revenue.
2. The demand of inflight perishable foods is normally distributed and affected by seasonality.
3. News vendor model provided a more robust solution with significantly less waste.
Because of the high market growth of biologics drugs- temperature sensitive pharmaceutical products, the cold chain management has become an increasingly important component of the overall pharmaceutical supply chain. On the other hand, the emerging economics have been the main driving force of global pharmaceutical market, especially China, with nearly 20% CAGR in pharmaceutical market in the past 5 years, is the most promising region and could be the second largest pharmaceutical market in the world by 2020. To explore the opportunities in cold chain management in emerging economics, this research chooses China as a case for study. As a pioneer study, this research is to analyze the market trend and policy effects on pharmaceutical cold chain in China, to map the key supply chain issues on cold chain management, and to point out opportunities in the near future.
1. The current cold chain logistic is mostly self-build by big pharmaceutical companies. However, once the new regulation completely implemented in the near future and also the industry standards are practiced well, 3PL could be a solution to the industry. 3PL is a new business opportunity in China’s pharmaceutical cold chain in long-term.
2. From now to 2016, new technology and equipment will be highly in need to build a modern pharmaceutical cold chain system in China.
3. To design a successful new business model in China’s pharmaceutical cold chain, the business, manufacturing and logistics model must align with the new regulations and the new China’s national healthcare reforms which is the most critical challenge to cope up with.
Sponsor: A Multinational Food & beverage Company
The multiechelon system and high demand volatility combined together make inventory management for Barry Callebaut extremely difficult. The aim of the research is to analyze the multiechelon inventory system of Barry Callebaut for developing a better insight so as to serve the customer in a better manner and to accommodate the increased demand while maintaining operational efficiency.
1. Any (small) increase in the demand deteriorates the customer service level at the output buffer considerably. This results in an increase in backorders.
2. The demand variability does not cause any significant impact on the input buffer. This may be due to high input buffer level inventory. Further research needs to be carried out to investigate.
3. At the input buffer inventory, an increase in transportation lead time impacts the input buffer inventory levels which results in deterioration of customer service level at output buffer and an increase in backorders at the output buffer.
4. It is found that the customer service level is very sensitive to an increase in the transportation lead time. Hence the company should work towards decreasing the transportation lead time as much as possible. The results show that for maintaining an approximate IFR of 90%, the transportation lead time should not be greater than three days.
Sponsor: SME Corporation Malaysia
This work develops insights into the challenges faced by small and medium enterprises (SMEs) in Malaysia based on literature and case studies. Broad range of questions quantitative and qualitative was asked from four SMEs. The data and case studies of SMEs were analyzed. The research outcome was three fold. First the outcome aims to state various issues faced by the SMEs. Secondly it aims to understand the involuntary decision making of successful SMEs. Thirdly propositions are made for future researchers to pursue. This work draws attention towards select supply chain insights from Malaysian manufacturing and manufacturing related services SMEs through four case studies.
Local SME insights:
- Furniture market is a stable demand market with high customer loyalty where customers are willing to wait for the Made-to-Order products.
- None of the SMEs examined had taken any financial help from the government authorities and firm revenue was the only source of income for running the firm. This made these SMEs highly vulnerable to any demand or supply disruption
General SME insights:
- Vertical collaboration with selected suppliers and long term relationships helps increase SME flexibility to variations in consumer demand, manage capacity and reduce operational costs.
- Horizontal collaboration among SMEs helps to increase bargaining power and uses economies of scale. The resulting SME Cluster leads to lowering of overall logistic and procurement costs and aggregation of demand.
Sponsor: Local and International Non Government Organization
Because of production process variability, it is difficult for CKN Corporation executives to estimate the total time to complete a day’s orders. As CKN Corporation scales up in size, it becomes even more critical to have tight control of the production process. This research looks into the sources of variability and investigates strategies to reduce overall process variability. Through a discrete event simulation, this research analyzes the effects of improved control on chicken size, more regular live-chicken deliveries, and the elimination of perceived bottlenecks.
1. The variability in the time to process a day’s orders can be traced to the distribution of live chicken arrival times.
2. Perfectly uniform truck arrivals eliminated nearly all variability in the total time to process a day’s orders. Delivery windows as wide as twenty minutes reduced variability by approximately 50%.
3. Completely eliminating the halal slaughtering method had no statistically significant effect on the total time to process a day’s orders nor the overall process variability. Eliminating the halal slaughtering method would not reduce process variability or processing time in any significant way.