Lead Time Models for Analysis of Supply Chain Networks

Supply chains are formed out of complex interactions amongst several enterprises whose aim is to produce and transport goods so that customer desired products are sold at various retail outlets. Computing the total average cycle time for customer orders entering such a complex network of systems is an important exercise. In this paper, we present analytical models for evaluating the average lead times of make-to-order supply chains. In particular, we illustrate the use of generalized queueing networks and Clarke’s method, for computing the lead times in the dynamic and static settings, respectively. 1 The Supply Chain Process: An overview This is an important, all-encompassing process for a manufacturing company. Supply chain process (SCP) encompasses the full range of intra-company and inter-company activities beginning with raw material procurement by independent suppliers, through manufacturing and distribution, and concluding with successful delivery of the product to the retailer or at times to the customer. One can succinctly define supply chain management (SCM) as the coordination or integration of the activities/processes involved in procuring, producing, delivering and maintaining products/services to the customer who are located in geographically different places. Traditionally marketing, distribution, planning, manufacturing and the purchasing activities are performed independently with their own functional objectives. SCM is a process oriented approach to coordinating all the functional units involved in the order to delivery process. The SCP transits several organizations and each time a transition is made, logistics is involved. Also since each of the organizations is under independent control, there are interfaces between organizations and material and information flow depend on how these interfaces are managed. We define interfaces as the procedures and vehicles for transporting information and materials across functions or organizations such as negotiations, approvals (so called paper work), decision making, and finally inspection of components/assemblies etc. For example, the interface between a supplier and manufacturer involves procurement decisions, price and delivery negotiations at the strategic level and