Achieving X-sigma Deliveries in Supply Chains

Time-based competition and market globalization make it imperative for supply chains to have short and reliable order deliveries. This is difficult to achieve in view that activities of individual manufacturers are subject to various uncertainties such as unknown order arrivals and stochastic operations. Furthermore, delays of one manufacturer may propagate to it downstream manufacturers through precedence relationships. To stay competitive, it is critical to control variability and order lead-times across a chain, and to achieve delivering final products within specified target time windows with high probability. This is the key idea of achieving x-sigma delivery performance. In this paper, make-to-order supply chains with sequential workflows are considered. An effective solution methodology is developed to minimize overall order tardiness, earliness costs and delivery variability through effective scheduling and coordination. To accommodate new arrivals while fulfilling commitments of existing orders, a rescheduling approach is presented to generate high-quality schedules in a timely fashion. Numerical testing results demonstrate that the new approach is effective to schedule manufacturers across a chain to achieve the required three-sigma deliveries. Copyright © 2005 IFAC Keyword: Manufacturing scheduling, Supply chain, Six-sigma, Step penalty, Lagrangian relaxation