Toward integrated production and distribution management in multi-echelon supply chains

The effective management of multi-site systems involves the proper coordination of activities performed in multiple factories, distribution centers (DCs), retailers and end-users located in many different cities, countries and/or continents. To optimally manage numerous production and transportation decisions, a novel monolithic continuous-time MILP-based framework is developed to determine the best short-term operational planning to meet all customer requests at minimum total cost. The formulation lies on the unit-specific general precedence concept for the production scheduling problem whereas the immediate precedence notion is used for transportation decisions. To illustrate the applicability and potential benefits of the model, a challenging example corresponding to a supply chain comprising several locations geographically spread in six European countries has been solved to optimality with modest CPU times. Several scenarios with different logistics features were addressed in order to remark the significant advantages of using the integrated approach.

► Novel approach to the integrated operational planning of multi-echelon multiproduct production and transportation networks.
► The model considers direct shipping and/or via intermediate depots using warehousing and cross docking strategies.
► Approach to solve complex logistics problems of coordinated production and distribution schedules.
► The approach solves different scenarios comprising 16 locations geographically spread in six European countries.
► Numerical solutions show potential savings (>8%) that can be obtained by solving the fully integrated approach.