1. Introduction
According to Christopher (1992), a key feature of present-day business is the idea that it is supply chains that compete, not companies, and that the success or failure of supply chains is ultimately determined in the market-place by the end consumer. It is extremely important that firms undertake the right strategies to successfully compete. Fisher (1997) point out that supply chains must acquire capabilities to become efficient or agile in accordance with the type of products they market. In particular, an efficient supply chain is suitable for selling functional products. As suggested by Hill (1997) the order winner factor in this market is cost, having quality, lead time and service level as order qualifiers. The main supply chain strategy recommended in Towill & Christopher (1992) to become efficient is waste elimination.
The problem of concern in this paper is the reduction of transportation cost in routing operations. The problem of reducing routing costs has been treated exhaustively in the academic literature. The Vehicle Routing Problem (VRP) is well known in the Operations Research and Just in Time literature. Its application is well suited to situations in which full truck loads are not possible, and the consolidation of orders or loads from several points are required to achieve higher capacity utilization levels for reducing transportation cost. From the O.R. point of view, the interest is concentrated on the development of algorithms to achieve an optimal or near-optimal solution to the problem. From the JIT literature, vehicle routing is also known as a milk run. It is a key aspect to enable frequent shipments of small lots from suppliers to customers, and therefore allowing for a Just in Time integration with them. This work provides a brief description of the application of an approach that integrates both views; O.R. and JIT. This scheme has the purpose of identifying and reducing waste in this activity and is discussed in detail by Villarreal, et al., (2010) and Villarreal (2012).
This report consists of five sections. The next section deals with a brief review of the literature on the Vehicle Routing Problem (VRP) and lean transportation. Then, a description of the scheme utilized to decrease waste is described in Section 3. The application of this scheme is undertaken in Section 4, and Section 5 presents a summary of conclusions.
1. IntroductionAccording to Christopher (1992), a key feature of present-day business is the idea that it is supply chains that compete, not companies, and that the success or failure of supply chains is ultimately determined in the market-place by the end consumer. It is extremely important that firms undertake the right strategies to successfully compete. Fisher (1997) point out that supply chains must acquire capabilities to become efficient or agile in accordance with the type of products they market. In particular, an efficient supply chain is suitable for selling functional products. As suggested by Hill (1997) the order winner factor in this market is cost, having quality, lead time and service level as order qualifiers. The main supply chain strategy recommended in Towill & Christopher (1992) to become efficient is waste elimination.The problem of concern in this paper is the reduction of transportation cost in routing operations. The problem of reducing routing costs has been treated exhaustively in the academic literature. The Vehicle Routing Problem (VRP) is well known in the Operations Research and Just in Time literature. Its application is well suited to situations in which full truck loads are not possible, and the consolidation of orders or loads from several points are required to achieve higher capacity utilization levels for reducing transportation cost. From the O.R. point of view, the interest is concentrated on the development of algorithms to achieve an optimal or near-optimal solution to the problem. From the JIT literature, vehicle routing is also known as a milk run. It is a key aspect to enable frequent shipments of small lots from suppliers to customers, and therefore allowing for a Just in Time integration with them. This work provides a brief description of the application of an approach that integrates both views; O.R. and JIT. This scheme has the purpose of identifying and reducing waste in this activity and is discussed in detail by Villarreal, et al., (2010) and Villarreal (2012).This report consists of five sections. The next section deals with a brief review of the literature on the Vehicle Routing Problem (VRP) and lean transportation. Then, a description of the scheme utilized to decrease waste is described in Section 3. The application of this scheme is undertaken in Section 4, and Section 5 presents a summary of conclusions.
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