How can OR be used to improve supply chain management?

I'd say that OR adds the last 10 or 20% of value to you Supply Chain transformation. it's the cherry on the cake. Don't count on it to deliver the bulk of the value. 90% of what you can expect in terms of ROI from the project comes from the people and human intelligence you pour into scoping, asking the right questions, streamlining ideas and setting the right strategy to answer them. And when that is done, you'll know exactly what questions OR can help you solve, not the other way round. In my previous experiences, we've used OR for example to add a bonus touch such as optimizing inventory levels by fine tuning the parameters, AFTER we defined the strategies for them and the main guidelines to manage them.

In my Experience there are many ways OR can improve as SCM using systematic Network design, Multi-echelon Inventory Optimization, Routing and Transportation problems like Milk run,hub spoke system key elements Supplier selection, Production Planning and Scheduling improves SCM visibility and effectiveness.

OR can be applied to efficiently manage the inventory to meet certain service level at the same time minimizing the holding cost/overall investment in the inventory. Models such as Economic order quantity(EOQ), Newsvendor, (Q,R) can be used as per need. These models comes handy in deciding order quantities, reorder points, safety stocks based on the demand and lead time. Hopp and Spearman's 'Factory Physics' book is an amazing resource to get advanced knowledge in application of mathematical modelling to factory setting.

Within the context of transportation and routing, there are a variety of problems that could be addressed using OR techniques. With route optimization, one could determine the optimal sequence of stops to be visited in order to minimize overall distance or travelling time. Extending further, one could use ideas from Vehicle Routing Problem(VRP) to determine the optimal number of vehicles required for the network, and their corresponding routes. Also, custom models could be formulated to solve specific requirements like lane bidding optimization and carrier assignment optimization.

From optimizing transportation routes to fine-tuning network designs, OR is the architect of streamlined operations. In the face of uncertainty, OR's modeling prowess brings resilience. Vehicle routing, a critical puzzle, finds its solution in OR, minimizing costs and environmental impact. OR isn't just a tool; it's the catalyst propelling supply chains toward unparalleled efficiency.

In Dynamic, Volatile and Turbulent times the priorities and accordingly allocation of resources change to make Supply Chain Responsive and Cost Efficient. OR methods such as Goal programming can be useful: It is used to perform three types of analysis: 1. Determine resources required to meet the objectives. 2. Determine the extent of attainment of the goals and objectives with the available resources. 3. Providing the best satisfying solution under a varying quantum of resources and priorities. This method assumes the likelihood of deviations in targets and aims at minimising them.

Operations Research (OR) can be a valuable tool in improving supply chain management by optimizing various aspects of the process. Here are several ways in which OR techniques can be applied such as Inventory management, Network optimization,Production planning and scheduling,Demand forecasting, Risk analysis and mitigation and Vendor selection and procurement. Overall, by leveraging OR techniques, supply chain managers can make informed decisions, optimize operations, and improve the efficiency and effectiveness of their supply chains, ultimately leading to cost savings, better customer satisfaction, and increased profitability.

There is a broad range of methods, models and tools from OR that can improve supply chain management to identify and implement efficiencies. These could include the integration of forecasting models to model future product demand; the use of optimisation methods for inventory management, warehousing and distribution functions; applying stochastic methods to model supply chain risk; developing distribution schedule models employing network theory; and developing simulations to test and evaluate policy settings and selected resource levels. OR has a long history of application for SCM with bespoke models and tools available.