State of the art of supply chains and network design optimization in Emerging Economies : an Indian case study

Abstract

Emerging Markets are defined as nations with social or business activity in the process of rapid growth and industrialization. Market penetration of products across the country is an extremely difficult task due to poor infrastructure and prohibitive costs of infrastructure. The motivation for this thesis is to 1) develop a framework to reduce the complexity of the study by clustering a diverse pool of products into fewer major classes of products sharing similar features, 2) design a network optimization model to better serve the end consumer in two different states in India, and 3) assess and improve the scalability of the distribution network. The results of this research directly enhance the distribution models used to scale production and efficiently use supply chains in low to middle income countries, leveraging existing resources (retail outlets) to deliver goods in two Indian states and can be generalized to other states. The SKU classification methodology (clustering) can be generalized to other classes of products that logistics companies are currently delivering in rural India (food, pantry, commodities,'...). To the extent of our knowledge, this optimization network modeling has not been researched yet in developing economies. It was found that our methodology could help retailers get access to customers more efficiently. We finished by determining the optimal scalability strategy using cost effectiveness and service level effectiveness for two different Indian states, Maharashtra and Bihar. Keywords: scalability, supply chain, developing economy, case study, network design