mathematical modelling, and subsystem optimisation. The general approach is underpinned by four major areas: 1) process
mapping; 2) variable determination and data collection; 3) mathematical and simulation model construction; and 4)
sensitivity analysis.
3.1. Process mapping
Process mapping is “a valuable communication device to understand howprocesses operate and where responsibility lies”
(Collier & Evans, 2007, p. 273). Accurate process mapping, at the right level of granularity, facilitates the identification and
recording of all related activities and thus ensures that proper data collection takes place. This subsequently enables the
activity-based costing technique, which is defined by the Chartered Institute of Management Accountants (CIMA, 2005) as “an
approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs.
Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilise cost drivers
to attach activity costs to outputs.” In the cases where an improvement or restructure will be made to the system, two scenarios
can be constructed: the “as-is” and the “to-be” process maps. The “as-is” model serves two purposes: 1) to validate the “as-is”
process map through comparison against practical operational data; and 2) to serve as the basis for development of the “to-be”
process map. A comparison with the “as-is” process map allows for the detection of changes, and therefore better attention can
be focused on those areas that are changing. The process components that are not changed can be “ignored”, as we are more
interested in the net benefits brought by the processes changes. This is also helpful in reducing the errors introduced by
parameter estimation for identical processes, and therefore will improve the accuracy of sensitivity analysis.
When the supply network or logistics system involves more than one company, which in reality is usually the case, the
different actions and processes performed by different companies should be correctly recorded on the process maps so that
the role (and hence impacts) a company plays in the system can be examined.
In supply networks and logistics systems, some changes such as modal switch and network re-design, have long-term
impacts on the economic and environmental performance of the systems. These cases require careful and thorough analyses
of the associated costs, benefits and other key performance indicators. Appropriate process maps would be the cornerstones
in conducting meaningful analyses.
mathematical modelling, and subsystem optimisation. The general approach is underpinned by four major areas: 1) process
mapping; 2) variable determination and data collection; 3) mathematical and simulation model construction; and 4)
sensitivity analysis.
3.1. Process mapping
Process mapping is “a valuable communication device to understand howprocesses operate and where responsibility lies”
(Collier & Evans, 2007, p. 273). Accurate process mapping, at the right level of granularity, facilitates the identification and
recording of all related activities and thus ensures that proper data collection takes place. This subsequently enables the
activity-based costing technique, which is defined by the Chartered Institute of Management Accountants (CIMA, 2005) as “an
approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs.
Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilise cost drivers
to attach activity costs to outputs.” In the cases where an improvement or restructure will be made to the system, two scenarios
can be constructed: the “as-is” and the “to-be” process maps. The “as-is” model serves two purposes: 1) to validate the “as-is”
process map through comparison against practical operational data; and 2) to serve as the basis for development of the “to-be”
process map. A comparison with the “as-is” process map allows for the detection of changes, and therefore better attention can
be focused on those areas that are changing. The process components that are not changed can be “ignored”, as we are more
interested in the net benefits brought by the processes changes. This is also helpful in reducing the errors introduced by
parameter estimation for identical processes, and therefore will improve the accuracy of sensitivity analysis.
When the supply network or logistics system involves more than one company, which in reality is usually the case, the
different actions and processes performed by different companies should be correctly recorded on the process maps so that
the role (and hence impacts) a company plays in the system can be examined.
In supply networks and logistics systems, some changes such as modal switch and network re-design, have long-term
impacts on the economic and environmental performance of the systems. These cases require careful and thorough analyses
of the associated costs, benefits and other key performance indicators. Appropriate process maps would be the cornerstones
in conducting meaningful analyses.
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