Developing financially sustainable supply chains
Our interdisciplinary research has generated multi-million-pound financial benefits for organisations in the UK and overseas.
Demand uncertainty and complex production and inventory systems leave many companies with too much stock.
Such excessive levels of inventory can result in financially unsustainable supply chains.
A team of researchers from Cardiff Business School helped to solve this problem with a whole systems approach.
They developed new forecasting, inventory control and production planning policies that helped companies reduce their investments in inventories.
Working with partner companies the team created multi-million-pound financial benefits through efficiencies, income growth, new contracts, and safeguarding and creating jobs.
Supply chain behaviour
From the early 2000s, the research team started exploring the combination of lean thinking with analysis of supply chain behaviour.
They demonstrated how the bullwhip effect - where demand uncertainty is amplified through the supply chain - creates uncertainty for decision makers and increases production and inventory holding costs.
The researchers also investigated a range of modern, e-commerce enabled supply chain structures. Comparing them to lean manufacturing systems, they were able to signpost managers to a suite of strategies depending on their circumstances.
Further projects aimed to eliminate the bullwhip effect and led the team to uncover new insights on the impact of ordering policies on supply chain behaviour. Collectively, the researchers learned how:
- forecasting has to be properly integrated into the inventory and ordering policy
- cognitive issues and judgmental biases impact forecasting accuracy and inventory performance
The team also explored contemporary issues such as 3D printing enabled supply chains and the influences of inventory-forecasting on the performance of circular supply chains.
Enhanced inventory management
Translating their research on forecasting, inventory control, production planning, and supply chain cost-effectiveness into commercially viable solutions, the team supported enhanced inventory management for five large organisations.
DSV/Panalpina
Between 2014 and 2015, Panalpina (since acquired by DSV) partnered with Cardiff Business School on two knowledge transfer partnerships (KTP).
The projects applied Cardiff research to help Panalpina’s customers reduce their investments in inventory.
The team developed a demand-driven inventory algorithm which enabled Panalpina to analyse its clients’ supply chains and identify opportunities to reduce inventories, free up cash and improve service levels.
Prior to beginning our KTP projects with Cardiff University, Panalpina was losing €40m per year. At the time of DSV buying Panalpina, and after implementing these changes, we were making 10 million euro per year which is an overall annual profit benefit of £50m.
Lexmark
Lexmark invited members of the research team to help reduce bullwhip in its operations.
The team worked with Lexmark to incorporate their knowledge and algorithms into the organisation’s Enterprise Resource Planning system, SAP.
This resulted in significant bullwhip reduction and won the Frost and Sullivan’s 2014 Manufacturing Leadership Award in the supply chain management section.
Yeo Valley
In 2016, the researchers worked with Yeo Valley to streamline the company’s forecasting, production planning and replenishment systems.
By tuning forecasting algorithms, shortening production cycles, setting appropriate safety stocks, and re-designing Yeo Valley’s production planning system, the project led to approximately £3m worth of cash and trading benefits for the organisation.
Qioptiq
Drawing on their forecasting research, a further KTP with Welsh photonics company Qioptiq, saw the team develop a toolset to facilitate leaner circular supply chains and reduce inventory by 25%, leading to major cost savings.
The KTP led us to simplify our supply chain and utilise a new toolset to support our logistics supply operations, allowing us to effectively pinpoint demand, forecast returns and plan inventory orders.
The collaboration helped the company secure a six-year deal worth £82m with the Ministry of Defence (MOD) to service night vision equipment.
The MOD contract enabled Qioptiq to build a new £3.7m warehouse and create and safeguard high quality jobs benefitting the local community and economy.
Accolade Wines
A two-year project between 2018 and 2020 helped Accolade Wines streamline operations and achieve significant reductions in its inventory levels.
The team improved the organisation of the production processes, putting a new production schedule in place.
Accolade also reduced costs for their customers by changing the way they calculate safety stock following algorithmic improvements identified by Cardiff researchers.
Whilst it is not possible to quantify the financial benefits of these changes there is no doubt that they have led to a distinct reduction in the amount of cash Accolade Wines has tied into inventory. The project has most certainly, directly and indirectly, positively impacted approximately 400 employees across the South of England.
Meet the team
Key contacts
Selected publications
- Hedenstierna, C. P. T. et al. 2019. Economies of collaboration in build-to-model operations. Journal of Operations Management 65 (8), pp.753-773. (10.1002/joom.1014)
- Goltsos, T. E. , Syntetos, A. A. and van der Laan, E. 2019. Forecasting for remanufacturing: the effects of serialization. Journal of Operations Management 65 (5), pp.447-467. (10.1002/joom.1031)
- Syntetos, A. A. , Kholidasari, I. and Naim, M. M. 2016. The effects of integrating management judgement into OUT levels: in or out of context?. European Journal of Operational Research 249 (3), pp.853-863. (10.1016/j.ejor.2015.07.021)
- Syntetos, A. , Boylan, J. E. and Disney, S. M. 2009. Forecasting for inventory planning: a 50-year review. Journal of the Operational Research Society 60 , pp.S149-s160. (10.1057/jors.2008.173)
- Disney, S. M. , Naim, M. M. and Potter, A. T. 2004. Assessing the impact of e-business on supply chain dynamics. International Journal of Production Economics 89 (2), pp.109-118. (10.1016/S0925-5273(02)00464-4)
- Dejonckheere, J. et al., 2003. Measuring and avoiding the bullwhip effect: A control theoretic approach. European Journal of Operational Research 147 (3), pp.567-590. (10.1016/S0377-2217(02)00369-7)
Share
Cardiff Business School
We’re an AACSB International and AMBA-accredited business school with a clear public value purpose: to make a positive impact in the communities of Wales and the world.
Contact us
School Office- Phone: +44 (0)29 2087 4674
Course queries
Make an enquiryVisit Cardiff Business School
Cardiff Business School, Cardiff University, Aberconway Building, Colum Drive, Cardiff, CF10 3EU
Connect with us
