Keeping supply chains stable using mathematics

Thursday, 02 December, 2021

Keeping supply chains stable using mathematics

Global supply chains comprise complex networks, making them particularly vulnerable to logistics problems that could result in empty supermarket shelves.

Earthquakes, floods or even political unrest can all compromise supply chains, but Fraunhofer experts provide IT solutions that counteract supply bottlenecks in international goods traffic and maintain robust supply chains.

“Mathematically speaking, these disruptive events create a multidimensional decision problem,” explains Dr Heiner Ackermann, Deputy Head of Optimization — Operations Research at the Fraunhofer Institute for Industrial Mathematics ITWM.

Ackermann’s team of experts is developing mathematical methods that can be used to analyse the properties of supply chains and calculate how to minimise risks to supply chains.

The failure scenarios simulated on the basis of these calculations show at which points there is a greater need for action.

In the second step, the researchers focus on holistic optimisation — for a more robust supply chain that can cushion risks without incurring major costs.

The experts package all variables into a multi-criteria optimisation problem. In this way, they determine the best possible solution for the triad of resilience, cost and risk.

Algorithms calculate the optimum balance and with it various options for raw materials, suppliers and warehousing. Even the use of alternative materials is considered. The top priority is: as few assumptions as possible.

“Our work has set the ball rolling — companies that previously relied on Excel spreadsheets and their gut feeling are now engaging in very fruitful discussions,” Ackermann explains. “Whether you are dealing with supply chains or supply networks, mathematics is a universal and very effective tool.”

Early detection of potential supply shortages

The Fraunhofer Institute for Material Flow and Logistics IML also offers effective support for testing and optimising supply chains with its Order-To-Delivery-NETwork (OTD-NET) simulator. Thanks to this tool, planning and material flow processes from order to delivery can be continuously assessed.

“OTD-NET maps even highly complex supply chains in full and at all levels, including the planning and information flow processes. Using various parameters, it is possible to accurately model cooperation between supply chain partners on the computer,” specifies Marco Motta, Head of Supply Chain Engineering at Fraunhofer IML.

Combining digital twins of supply chains with simulations

The toolset examines networks particularly with regard to customer promises in terms of delivery reliability and quality, costs, environmental considerations and, in the analysis of alternative scenarios, resilience.

“In the simulation, I can easily play around with demand peaks, a slump in the respective market or scenarios in which production is disrupted,” the Fraunhofer IML expert explains.

In this way, forecasts can be made about how a supply chain will react in a state of emergency.

Logistics assistance systems that combine a digital twin of the supply chain with simulations show dispatchers which cargo ships have loaded which parts, where these are located and when the consignment will be available at the required location. Supply for the next 20–30 weeks can thus be depicted for global networks, enabling potential bottlenecks to be detected early on.

Tracking is also a distinguishing feature of the solution for demand and capacity management. Not only is the number of parts affected displayed, but planners can also directly see the impact of this on the whole of production.

Increasing resilience to future pandemics

In the European research project ‘CO-VERSATILE’, participants are doing everything in their power to increase the European manufacturing sector’s resilience to future pandemics.

Experts at Fraunhofer IML have developed a simulation model that takes into account future peaks and fluctuations in demand as well as supplier risks. Companies are immediately given an overview of which effects they will have to face.

“We have created very simple models to facilitate rapid feedback and implementation for a variety of companies,” the project manager explains.

Particular attention was paid to capacities, lead times, transportation frequency and possible supply restrictions. Users can see how individual factors interplay — an invaluable advantage compared to the long-standing Excel solution.

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