Just like there is an optimal production schedule for a factory that minimizes the total production and inventory carrying cost given labor and material availability; manufacturing and storage capacity; and demand requirements, there is an optimal supply chain schedule that minimizes the total cost to consumption including inventory carrying, transportation, warehousing, and lost sales given the supply chain’s production, transportation, and warehousing capacity and inventory requirements at every node in the logistics network. In some supply chains a fourth party (Figure 1) is used to produce the optimal schedule with each major player (supplier, customer, carrier) sharing true demand and capacity information with the fourth party who has the responsibility to produce an optimal supply chain design and operating schedule including retail receiving hours, warehouse shipping and receiving schedules, transportation schedules, and production schedules.
One fallacy in supply chain scheduling is that all scheduling should be pull-based. Study after study has revealed that a mix of pull and push-based scheduling techniques characterize supply chain optimization. Tools such as the IBM supply chain simulator and the growing list of supply chain planning tools are required to identify the appropriate mix and links for pull and push-based scheduling.