Architecting fail-safe supply networks

366 Pages·2019·24.59 MB·English

by  Allen

Architecting Fail-Safe
Supply Networks
Shabnam Rezapour, Ph.D.
Enterprise and Logistics Engineering
Florida International University, Miami, Florida, USA
Amirhossein Khosrojerdi, Ph.D.
Risk and Portfolio Analytics, Credit and Decision Management
Discover Financial Services, Chicago, Illinois, USA
Golnoosh Rasoulifar, Ph.D.
Postdoctoral Research Fellow
Mewbourne School of Petroleum Engineering
University of Oklahoma, Norman, Oklahoma, USA
Janet K. Allen, Ph.D.
James and Mary Moore Professor
School of Industrial and Systems Engineering
University of Oklahoma, Norman, Oklahoma, USA
Jitesh H. Panchal, Ph.D.
School of Mechanical Engineering
Purdue University, West Lafayette, Indiana, USA
Ramakrishnan S. Srinivasan, Ph.D.
Principal Scientist
TCS Digital Manufacturing and Operations Innovation Program
Tata Consultancy Services, Milford, Ohio, USA
Jeffrey D. Tew, Ph.D.
Chief Scientist and Director
TCS Digital Manufacturing and Operations Innovation Program and
TCS Cincinnati Lab, Tata Consultancy Services
Milford, Ohio, USA
Farrokh Mistree, Ph.D.
L.A. Comp Professor
School of Aerospace and Mechanical Engineering
University of Oklahoma, Norman, Oklahoma, USA
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A SCIENCE PUBLISHERS BOOK
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Library of Congress Cataloging-in-Publication Data
Names: Allen, Janet K., author.
Title: Architecting fail-safe supply networks/Janet K.Allen[and(cid:86)(cid:72)(cid:89)(cid:72)(cid:81)
others].
Description: Boca Raton, FL : CRC Press, [2018] | Includes bibliographical
references and index.
Identifiers: LCCN 2018022524 | ISBN 9781138504264 (hardback)
Subjects: LCSH: Business logistics. | Materials management.
Classification: LCC HD38.5 .A566 2018 | DDC 658.7--dc23
LC record available athttps://lccn.loc.gov/2018022524
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Foreword
Volatility and risk to business have increased with the complexity of
today’s global supply chain networks. This is why the proposition of “Fail-
Safe Supply Networks” becomes promising. This book is the outcome
of a collaboration between TCS Research & Innovation, University of
Oklahoma, and Purdue University. I congratulate the authors of this
monograph for exploring this subject at depth and providing a framework
that can be applied across multiple industries.
The authors establish a framework called Fail-Safe Networks,
containing five different components: reliability, flexibility, robustness,
structural controllability, and resilience. They take a bold stand contrary
to current thinking as embodied in the supply network literature:
disruption management decisions made in the strategic network design level
are not independent from variation management decisions made in operational
flow planning. These interactions necessitate managing disruptions and
variations concurrently in supply networks.
In this monograph, the authors examine the management of risks along
the variation-disruption spectrum in simple as well as convoluted supply
networks, using the components of the Fail-Safe framework. They present
detailed mathematical models and numerical analysis of results for each
component in the framework. They also investigate how risk management
decisions made to handle variations and disruptions mutually affect each
other, and explore the interactions existing between these two groups of
risk management decisions. In closing, the authors apply the framework
to other networks such as electric grids and transportation arteries, as
well as emerging networks like the Internet of Things (IoT). Technological
advances catalyze the formation and growth of networks in various
domains, and generalizing the Fail-Safe framework will facilitate risk
management in these networks as well.
There is a wide variety of supply network risk management theories.
What distinguishes this book is that the approach is holistic, considering
both variations and disruptions in supply and demand. It brings together
a wealth of research in optimization and uncertainty modeling within
the domain. The body of work of Professors Allen and Mistree, and their
iv Architecting Fail-Safe Supply Networks
associates in systems research is well recognized. Dr. Jeff Tew and his team
at TCS Innovation Labs bring a real world perspective to the models. I
strongly recommended this book to network researchers in general and
the Supply Chain Management community in particular.
K. Ananth Krishnan
Executive Vice President and Chief Technology Officer
Tata Consultancy Services
Preface
Networks are ubiquitous—from transportation networks to social
networks. Supply networks play an essential role within the economy
and within the life of every human being. The networks are increasing
in sophistication with advancing technologies such as Mobility, Big
Data, Social Media, Cloud Computing, and Artificial Intelligence. These
technologies are extending the reach of networks while simultaneously
accelerating their real-time capabilities. With increasing complexity
and technical sophistication, there is a need to design fail-safe supply
networks to mitigate the impact of variations and disruptions on people
and corporations.
In this monograph we propose an integrated approach for designing
fail-safe supply networks, in the face of both supply and demand
risks, and how the impacts are propagated across various levels in the
network, drawing upon the concepts of reliability, robustness, flexibility,
resilience, and structural controllability. This is achieved by (1) developing
a network structure that mitigates the impact of disruptions that distort
the network and (2) planning a flow through the network to neutralize
the impact of variations. Contrary to current thinking as embodied in the
supply network literature, decisions made to manage disruptions are not
independent of decisions made to manage variations.
The primary audience of this book includes graduate students
in industrial engineering, operations research, and supply chain
management, and practicing engineers and managers seeking to improve
their supply operations. This monograph comprises ten chapters. We
recommend reading Chapters 1 and 10 initially to establish context for
what is included in this monograph. While we recommend reading the
remaining chapters sequentially, each chapter is self-contained, and can
be read independently in any sequence.
In closing, we observe that the material in this monograph is anchored
in the doctoral dissertations of Shabnam Rezapour and Amirhossein
Khosrojerdi whom we were privileged to mentor at the University of
Oklahoma, Norman, USA. Their work was supported by the University of
vi Architecting Fail-Safe Supply Networks
Oklahoma LA Comp Chair and the John and Mary Moore Chair accounts,
Grant NSF ECCS 1128826, and Tata Consultancy Services, India. We much
appreciate the guidance provided by Vijay Primlani and the staff of CRC
Press to create this monograph.
All of the authors are grateful for the sustained support and
encouragement from their families throughout the process of writing this
book.
Janet K. Allen and Farrokh Mistree
May 11, 2018
Contents
Foreword iii
Preface v
1. Conception of Fail-Safe Supply Networks 1
2. Variation Management in a Single Forward Supply Chain 29
3. Variation Management in Pre- and After-Sales 53
Supply Chains of Non-Repairable Products
4. Variation Management in the Product-Service 104
Supply Chains of Repairable Products
5. Variation Management in Supply Networks 153
6. Disruption Management using Robust Design in 195
Supply Networks
7. Structural Controllability in Managing Disruptions in 225
Supply Networks
8. Disruption Management: Resilience Design of Structurally 249
Controllable Supply Networks
9. Concurrent Management of Disruptions and Variations 284
10. Emerging Technologies and Extension of the Fail-Safe 335
Framework to Other Networks
Index 355

C 1
hapter
Conception of
Fail-Safe Supply Networks
A network is a set of interconnected entities. Networks permeate
many aspects of human endeavor, as evidenced by the structures in
education, society, and business, with technological advances catalyzing
an unprecedented level of connectivity and dynamic flow. The central
problem we address in this monograph is network failure precipitated by
various types of risks. To assist in exploring and solving this problem,
we focus specifically on supply networks, and recommend architecting
Fail-Safe Supply Networks. We investigate two main types of risks that
threaten supply networks, namely variations and disruptions and explain
at a high level the elements of Fail-safe supply networks: reliability,
robustness, resilience, flexibility, and structural controllability. Finally, we
provide an overview of the following chapters, wherein we describe each
of these elements, culminating with our thoughts on how these models
can extend beyond supply networks.
1.1 Introduction: Networks and the Power of Connections
Many scientists consider the cell to be the fundamental building block of
life. Human brain cells are connected by structures called synapses; there
are between 50 trillion and 100 trillion synapses in the average human
brain. In neuroscience, the term livewiring refers to the process of constant
modification to the synaptic connections, a process that is essential to
the remarkable adaptability of the brain (Eagleman 2015). Similarly, an
individual has many abilities; as individuals form family bonds and wider
social ties, their physical, mental and monetary capacities also increase. In
the same way, the utility of a single medical diagnostic machine is small
compared to one that is connected to several databases and physicians, as
these connections facilitate the accuracy and rapidity of diagnoses (Ramo