Multiple supplier/delivery inventory models : A review from an after-market perspective

Abstract: After decades of industrial manufacturing markets have become saturated which is followed by decreased growth in sales, increased competition, and razor thin profit margins. This opens up for a new field of business competition, the aftermarket. Delivering value over time for customers is now a competitive advantage with too much potential to overlook. The after-market differs from regular industrial inventory management by being managed by service-levels based on probability distributions as break-downs occur randomly. This review aims at investigating the potential benefits of using multiple-sourcing/ delivery modes and assessing available models in the context of the after-market. Three categories in the field are outlined: strategy, emergencydelivery, and order-splitting, each with significantly different value propositions. Aspects such as risk mitigation, importance of supplier competition, and operational flexibility are being discussed. Seven models from the category “Emergencydelivery” are subjected to a closer inspection where two models could be of further interest. It is found that a majority of available models are based on back-order penalties, thus not feasible in practise. No model that caters to the formulated problem has been found, nor seem to exist due to complexity. Instead, an alternative problem is suggested and formulated as a matching problem which approaches the multiple-sourcing/delivery concept from an aggregate level. Syncron is recommended to keep using the same approach as today and investigate the suggested problem instead.