As supply chain managers seek to optimize the movement of goods and services, it can make great sense to rely on common sense, says Larry Snyder. But in a small percentage of cases, a chain can defy common sense.
Snyder, assistant professor of industrial and systems engineering and codirector of Lehigh’s Center for Value Chain Research (CVCR), proved this recently with a supply chain model customized for Bethlehem candymaker Just Born Inc. The model showed that minor changes to vehicle routing and facility locations could save the company tens or hundreds of thousands of dollars a year.
“Experienced managers tend to know what works well, but mathematical models can expose situations in which the commonsense approach is not optimal,” says Snyder. “For example, one would expect that the most efficient way for Just Born to ship candy would be to use full-truckload shipping as much as possible, but it turns out that the company was doing too much truckload shipping and not enough less-than-truckload shipping. In supply chain management, exceptions are part of the equation.”
Another outcome of the project was Just Born’s recent decision to purchase the former Circuit City warehouse in Bethlehem and move its warehousing operations to that facility from Scranton. Using Snyder's model, Just Born, the maker of Peeps and other popular brands, determined it could not only improve efficiency with the new warehouse location, but could also persuade more candy companies to share the facility and the outbound trucks leaving its loading docks.
Twenty years ago, says Snyder, supply chain management was seen merely as a way to reduce costs, but today it is regarded as a competitive advantage that adds value for customers.