Product availability improvement for an analytical consumables supply chain : distribution and transportation

Abstract

This thesis work focuses on supply chain operation optimization on column consumables at Waters Corporation in order to improve product availability to 95% to customers. This thesis project is conducted by collaboration of Han, Hua and Lee as a team through interviewing stakeholders, performing historical data analysis and model simulation. Hua's thesis focuses on safety stock allocation in different stages of column supply chain and Lee's thesis focuses on replenishment policy of products with consistent high demands and production policy for build-to-order products. This thesis focuses on improving product availability of products with relatively low demands and high variability. Due to the high uncertainty of geographical demand distribution and unbalanced on-hand inventory at major distribution centers around the world, pooling inventories into a single global distribution center is proposed to increase the company's capability to better fulfill customer requests. A single global distribution model is designed for Waters Corporation's column products to analyze the change in product availability. Further optimization on inventory using lot size-reorder point model with manufacturing lot size constraint reduces the total cost of inventory. As a result of constructing a single global distribution center, the product availability can be improved to 100% for products with current product availability of 70% or higher. For products with current product availability lower than 70%, an improvement to 80% to 90% can be achieved. The total on-hand inventory of all products within the scope of this thesis can be reduced by 14%. A discussion about potential influence of single distribution center on transportation and impact on customers is also included.