I attended the CSCMP Chicago Roundtable event at RR Donnelley last week (February 11, 2009) and heard an interesting presentation by my colleague Jay Jayaraman. He discussed a project we are working on where a manufacturer of a commodity has the choice of exchanging product with a competitor. The idea is that a company can source an order from a competitor’s location that is closer to the intended customer than its current manufacturing base. The impetus being a saving on transportation costs. The key is that both companies can benefit from the swap since they both can reduce transportation costs, and each company keeps their relationships with their customers. Of course, this scenario can only work with commodity-type products.
To take full advantage of the situation, our network modeling and production planning tool, LogicNet Plus XE, can be used to determine the best possible swaps as well as understand all the constraints that impact the results. Doing this type of analysis with Excel can lead to omissions and sub-optimization.
It’s fascinating how collaboration, even amongst “enemies”, can lead to benefits for all…
P. Louis Bourassa
Technical Account Manager
IBM Decision Optimization
with Tags: costs X
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