Systems Design Project Transport Optimization and Green Supply Chain

Systems Design Project: Transport Optimization and Green Supply Chain Prepared by: Brian Murphy Senior in Systems Science and Engineering Washington University, St Louis, MO Phone: (805) 698-5295 Email: bcm1@cec.wustl.edu Supervised by: Mike Cannon Logistic Functional Manager Lockheed Martin, O’Fallon, IL Phone: (618) 334-7309 Email: mike.cannon@lmco.com Bob Ripeshoff Chief Architect of Savi Logistics Systems Lockheed Martin, O’Fallon, IL Phone: (618) 806-0606 Email : robert.d.riepshoff@lmco.com Background: The US Government moves more supplies, people and materials by a tremendous margin than any other entity or organization in the world Consequently, their supply chain and transport activities yield tremendous amounts of carbon emissions The current administration has made the reduction of carbon emissions a staple of its domestic policy In addition, Lockheed Martin, a key provider for the government’s technological and logistics needs has made it a company-wide imperative to go green Both the government and Lockheed Martin can make a significant stride towards this goal by reengineering their supply chain processes for the purpose of minimizing carbon emissions Aside from reducing carbon emissions, there are a number of other incentives to go green A greener and more efficient supply chain will likely reduce the amount of energy used over the course of the supply chain This proves beneficial for any company or supplier looking to reduce expenses as the cost of energy continues to increase There is also current and pending legislation that penalizes high energy consumption and carbon emissions while rewarding a reduction in both A company’s commitment to a greener supply chain amounts to less government fees which in turn amounts to a stronger financial standing Finally, as consumers’ desire for less carbon intensive goods and services continues to increase, a forward looking company with a sundry of green initiatives becomes more appealing to the market My Contributions: Ultimately, the goal of the project is to develop an optimal supply chain that will reduce carbon emissions and, in turn, reduce total supply chain costs The first step towards that goal involves thorough research of a current supply chain What needs to be established are the resources and demands that drive the supply chain The resources generally include suppliers, manufacturing plants, storage facilities, distribution centers and the methods of transportation in between The demand simply includes what the customer orders Once the aforementioned pieces of information are known, the supply chain can be visually mapped out and both a phase-by-phase and holistic grasp of how the supply chain functions can be achieved From there, it is necessary to identify the costs associated with each phase of the supply chain (i.e storage costs, transportation costs, manufacturing costs, energy costs etc.) In addition, once we know the methods of transportation used across the supply chain, we need to calculate their respective carbon emissions Once we have compiled all of this data, we can begin to mathematically model the system and use linear programming to find an optimal utilization of the resources within the supply chain that minimizes carbon emissions and total costs while satisfying customer demand The supply chain information gathered from the research will also be utilized to formulate the associated constraints of this linear programming model Methods and Technology Employed: A simple example of a simply chain can be visualized as follows: When we seek to form a linear programming problem based on the above model, the main issues are determining the choice of available facilities and designing the transportation routing between parties to satisfy customer demand while reducing overall supply chain costs (although, for the purpose of this project, the goal is to reduce greenhouse gases and costs) This sort of problem is generally constrained by capacity limitations for suppliers, manufacturers and distribution centers The objective function for this example will reflect a minimal cost (to reiterate, the objective function for this project will reflect minimal costs and carbon emissions) and is generally composed of five parts The first three parts include the raw materials, manufacturing, holding costs and the transportation between parties The other two parts represent the fixed operating costs of plants and warehouses All these things considered, we end up with the following variables: And an optimization problem that looks like this: Represent capacity constraints of suppliers, plants, distribution centers and customers respectively Ensures item is delivered to only operating plants and warehouses respectively Expected Outcomes: Using the data acquired on methods of transport and their respective carbon footprints along with the data acquired on the resources and demands that drive the supply chain, we hope to formulate a modified version of the general model described above that will lead to significant reductions in carbon emissions and, in turn, costs ... a number of other incentives to go green A greener and more efficient supply chain will likely reduce the amount of energy used over the course of the supply chain This proves beneficial for any... Contributions: Ultimately, the goal of the project is to develop an optimal supply chain that will reduce carbon emissions and, in turn, reduce total supply chain costs The first step towards that... that goal involves thorough research of a current supply chain What needs to be established are the resources and demands that drive the supply chain The resources generally include suppliers,