DIGITAL
As of February 1995, Digital Equipment Corporation stood as the third largest vertically integrated computer company in the world. In the early 1990's, Digital's annual revenues exceeded ten billion dollars serving eighty-two countries including the United States. Given such a large customer base, Digital uses the Global Supply Chain Model (GSCM) to determine manufacturing and distribution strategies and also to examine supply chain alternatives. The GSCM program which has saved Digital over one hundred million dollars utilizes a mixed-integer linear methodology that integrates a global multi-product bill of materials for supply chains and a model of worldwide manufacturing and distribution decisions. Companies that face very short product life cycles and extremely fast technological advancement find GSCM ideally suited to their supply and demand decision-making tasks and also find GSCM
GSCM minimizes a weighted combination of cost and activity periods. Due to implications of international business, the model also includes a module for duty drawback and avoidance to help model trade agreements, restrictions, and international tax considerations. useful in rapid deployment analysis. GSCM knows to differentiate products based on cost per unit and profit per unit when scheduling production. Some of the key features of the program include the implementation of weighted activity time. Costs included within the model include production and inventory costs, facility material handling costs, fixed overhead, taxes, and transportation costs. The GSCM model exhibits a special structure that allows the user to specify how much it would cost to violate a particular constraint. GSCM has allowed Digital to make the necessary changes to the company's manufacturing chain in order to remain a market contender. Some of the typical analyses done include finding least-cost supply chains, fastest cycle times, modeling hypothetical structuring effects, source swapping, and many other cause and effect scenarios. Since Digital manufactures several products which each take different amounts of time to make and ship, the use of a simple cycle time in the objective function would lead to inaccuracies because cycle time simply represents the longest time-path in an entire manufacturing process. The solver temporarily ignores inconsequential constraints in order to assemble a solid solution and then readjusts it to an optimal global solution by attending to the less important details. The solver uses branch-and-bound enumeration which chains together costs associated with chain reaction decision outcomes. Elastic penalties help the firm decide which constraints have some flexibility and which should be respected firmly. The sourcing and capacity planning group within Digital uses GSCM.
Common topics in this essay:
Model GSCM,
Digital GSCM,
Equipment Corporation,
Finally GSCM,
supply chain,
,
supply chains,
weighted activity,
manufacturing distribution,
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