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Supply Chain Management

Helena Ramalhinho Lourenço and Martín Gómez Ravetti

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1242
What Is Supply Chain Management? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1243
Decision-Making Problems in SCM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1245
Metaheuristic Algorithms for SCM Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1250
Current and Future Research Trends in SCM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1252
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1254
Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1254
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1255

Supply chain management (SCM) is related to the management of all activities
along a network of organizations to provide a good or a service to final customers.
The efficiency of these activities can have a great impact on customer‘s satisfac-
tion and cost reduction. However, SCM is not just the sum of activities along
the supply chain but, instead, it must consider the organization, supervision,
and control of all activities in the chain from an integrated and collaborative
perspective aiming to provide a competitive advantage. From this point of
view, an increase in the dimension and complexity of the decision problems
involved is expected, as several actors with different goals must be considered
to administrate efficiently the activities within the supply chain.

H. Ramalhinho Lourenço ()

Universitat Pompeu Fabra, Barcelona, Spain
e-mail: helena.ramalhinho@upf.edu
M. G. Ravetti
Universidade Federal de Minas Gerais, Belo Horizonte, Brazil
e-mail: martin.ravetti@dep.ufmg.br

© Springer International Publishing AG, part of Springer Nature 2018 1241

R. Martí et al. (eds.), Handbook of Heuristics,
1242 H. Ramalhinho Lourenço and M. G. Ravetti

This chapter briefly reviews the main concepts of SCM, identifying relevant
decision and optimization problems and discussing possible solution approaches.
Heuristics and metaheuristics are two of the best optimization tools to be used
in solving and providing business insights for the SCM problems. This chapter
also describes some successful metaheuristic approaches to SCM and it examines
future research trends. A large number of applications of metaheuristics to SCM
integrating new subjects, such as open and big data, smart cities, and online
decision-making, just to mention a few, are foreseen.

Supply chain management  Optimization problems  Metaheuristics


Supply chain management (SCM) consists in integrating processes by linking

major business functions from a particular company as well as across companies
with business relationships. SCM is more than just summed up of a series of
interconnected activities among business; it consist of integrated and collabora-
tive processes within a clear business model that leads to a more cohesive and
efficient performance of companies and better customer services. Being able to
optimize the activities and processes along a supply chain is strategical for most
The activities and processes in the supply chain management include topics like
location and network design, sourcing and inventory strategies, manufacturing and
resource strategies, sustainability and green strategies, and also transportation and
distribution strategies. At the operational level, we can find different topics as for
example customer service management, demand management, returns management
etc. To efficiently manage these areas, in many situations large-scale complex
combinatorial optimization problems must be solved in a very effective way to be
able to answer the increasingly demanding market.
Companies like INDITEX, AMAZON, DELL, etc. (just to mention some)
have used and applied the concept of supply chain management to improve their
processes and customer service with great success. These companies manage all
activities along the supply chain in a collaborative way with the final objective to
serve efficiently the final customer.
This chapter argues that metaheuristics can be an outstanding tool to help in the
SCM decision-making. On the one hand, problems associated with SCM are becom-
ing more complex and bigger causing greater impact on business performance. On
the other hand, metaheuristics have attributes (as accuracy, speed, simplicity, and
flexibility [1]) that can help dealing with problems that have arisen in SCM.
The objective of the chapter is to emphasize previous and potential metaheuris-
tic’s applications to SCM problems. We also revised some of the most relevant work
in the literature that combines and apply metaheuristics to problems in the area of
supply chain management.
43 Supply Chain Management 1243

The chapter is organized as follows: The first two sections describe main
concepts and decision-making problems in SCM. Next, relevant applications of
metaheuristics to different decision-making problems in SCM are presented and
discussed. Relevant current and future topics in SCM where heuristics and meta-
heuristics can have a significant impact on the management of a supply chain are
also examined. Finally, conclusions are drawn.

What Is Supply Chain Management?

Supply chain management has been a very popular topic in the last decade not
only in business but also in academia. However, it is still possible to find some
ambiguity in the concept and definition of SCM [2]. In this section, the most relevant
definitions are presented and discussed to clarify SCM concepts. This definition will
help us to identify the optimization problems within SCM and consequently the
applications of Metaheuristics to this area.
A supply chain is a set of organizations, activities, people, resources, and
products that interact to provide a service or a good to a customer, from the raw
material initial stages to the end users and backward when reverse logistics is
relevant. Therefore, it is a network of elements interacting with each other with
the objective of satisfying customers while minimizing costs. The management of
all activities along the supply chain is known as supply chain management. These
activities include logistics, manufacturing and operations, sourcing, distribution,
sales and marketing, accounting and finance, product design, and information
technology activities among others that can be specific for each type of industry.
The supply chain is related to the flow of products and goods along the chain, but
information flow also plays a relevant role in its efficient management. Another
related matter in SCM is the collaboration and integration of the activities in the
chain since decisions in one element affect directly the whole supply chain. Thus,
decision based on suboptimization approaches may lead to enormous inefficiencies
in the chain. Consequently, the decision-making problems in SCM are usually more
complex and have greater dimensions than other decision problems in traditional
individual businesses.
In the literature, several definitions can be found. However, in this chapter, only
two of the most commonly mentioned are analyzed.
The Council of Supply Chain Management Professionals (CSCMP) defines SCM
as: “Supply Chain Management encompasses the planning and management of
all activities involved in sourcing and procurement, conversion, and all logistics
management activities. Importantly, it also includes coordination and collaboration
with channel partners, which can be suppliers, intermediaries, third-party service
providers, and customers. In essence, supply chain management integrates supply
and demand management within and across companies” [2].
Simchi-Levi et al. [3] describes SCM as: “. . . a set of approaches utilized
to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that
merchandise is produced and distributed in the right quantities, to the right locations,
1244 H. Ramalhinho Lourenço and M. G. Ravetti

and at the right time, to minimize system-wide costs while satisfying service level
Janvier-James [4] presents a discussion on the lack of consensus in the definitions
of SCM, a list of definitions found in the literature, and review on the theory and
practice of SCM. In chapter 2 of [5], it can be found a history of SCM and also a
discussion on its definition.
When focusing on the common aspects of these definitions, it is possible to see
that a supply chain can be understood as a set of interconnected entities and activities
which are concerned with the plan, coordination, and control of materials, parts,
and finished goods from suppliers to customers. An essential aspect of a successful
management of these activities is the integration, cooperation, and coordination of
the decision-making processes as well as in the sharing of information throughout
the entire supply chain. Integrated decisions in SCM are related to cross functional
planning. SCM coordination attempts to maintain an efficient and smooth flow
of products and services. An effective SCM is not just a sum of management
individual activities, but it must take into account the effect of their interrelation,
seeking collaborative actions among the chain. But the importance of concepts as
performance and quality service cannot be ignored. The ideas around integration
and collaboration arise to improve the customer service and the performance by
taking advantages of the synergies among the elements of a supply chain and to
have a common objective and align the targets to satisfy the final customer.
In the literature, there is still some uncertainty about the definitions of SCM and
Logistics Management (LM). Although, these two areas have a serious overlap;
LM is a functional area of business while SCM crosses the businesses borders
including relationships and interactions from different entities, as providers and
customers for example. The CSCMP defines Logistics Management as follows:
“Logistics management is that part of SCM that plans, implements, and controls
the efficient, effective forward and reverses flow and storage of goods, services and
related information between the point of origin and the point of consumption to
meet customers’ requirements” [2].
Other similar definition can be found in Johnson et al. [6]: “Logistics define the
entire process of materials and products moving into, through, and out of a firm. In-
bound logistics covers the movement of materials received by the suppliers. Material
management describes the movements of materials and components within a firm.
Physical distribution refers to the movement of goods outwards from the end of the
assembly line to customers. Finally, SCM is a larger concept than logistics, dealing
with managing both the flow of materials and the relationships among channel inter-
mediaries from the point of origin of raw materials through to the final consumer.”
Supply chain management gives a particular emphasis on the integration of the
entire supply chain, including the logistics, marketing, operations and other activ-
ities within the organization, and with suppliers, suppliers of suppliers, customers,
and customers of customers, etc. Therefore, in this chapter, we focus on cross
functional aspects of the business collaboration and integrated activities as well as
the decisions in SCM.
43 Supply Chain Management 1245

Decision-Making Problems in SCM

The decision-making in SCM is very complex as it may involve a large number

of elements and processes, different businesses, or economic functions within each
business. This section presents some general and relevant decision-making problems
in SCM and relates them to optimization problems. Depending on the segment
of the economy or industry sector, the SCM may have specific characteristics,
sharing common difficulties. However, this chapter focuses on problems dealing
with integration and collaboration issues along the supply chain.
The decision-making problems may be categorized into two groups: plan-
ning (long-term decision-making) and execution (tactical and short-term decision-
In planning, the most relevant decisions relate to the following areas: network
design, sourcing and inventory strategies, manufacturing and resource strategies,
sustainability and green strategies, transportation and distribution strategies, infor-
mation strategies, and global supply chain strategies [7–10].
In execution, it is possible to identify several processes related to supply,
manufacturing, logistics and distribution, and post-sale [11]. The problems that arise
from these processes share cross functional issues along the chain.
How should the supply chain efficiency be evaluated? The main criteria men-
tioned in the literature are speed, reliability, cost, and customer satisfaction [4].
Other authors suggest resources measures (cost), output measures (customer re-
lated), or flexibility measures [10]. Therefore, the decision problems that can
occur in SCM are in general related to finding solutions that perform well for the
mentioned criterions.
Next, some examples of decision-making problems in a supply chain are
described, emphasizing the ones where metaheuristics have been or can be applied.
Please note that there is no intention to make an exhaustive list of problems but
exemplify some important problems in SCM where heuristics and metaheuristics
can be successfully applied. Some of these problems are already well known in
the operations research literature; however very few of them have considered the
integration and coordination aspect of SCM.
In SCM planning, two of the most relevant subjects are network design and
facility location problems. Location problems have been extensively studied in
operations research, and there is a large amount of applications of heuristics and
metaheuristics to this area. However, the problems in this chapter on location
and network design are problems from an integrated and collaborative perspective
within a supply chain. For a survey on managerial issues in supply chain and
network design, see [11]. The authors describe the main issues in network design,
as determining its size, number and locations of the facilities, integration with
tactical decisions as distribution, transportation, and inventory policies, as well
as fulfilling customers’ demand. They also evaluate supply chain network design
where competition among supply chains is taking into account in the design phase.
For the optimization point of view, the authors mention interesting objectives that
1246 H. Ramalhinho Lourenço and M. G. Ravetti

should be considered in the network design problem as social, environmental,

economical, agility, and uncertainty considerations. Melo et al. in [12] presented a
literature review of facility location models within a SCM context. One interesting
aspect of this work is the identification of the key features that these models should
capture in the strategic planning of the supply chain. They consider not only the
common objectives and constraints of standard location problems but also its inte-
gration with other decision aspects of the chains as capacity, production, inventory,
transportation, procurement, and routing. All of them received little attention in
the literature. Other problems still very relevant in network design problems are
globalization and internationalization of the supply chain, financial and taxation
factors, risk factors, and multiobjective models (due to the consideration of multiple
The sourcing and inventory strategy in SCM refers to several elements, for
example, inventory positioning in the network, inventory objectives balancing
cost and product availability, pull versus push systems, and inventory policies as
VMI (vendor management inventory) or restock policies. Inventory and sourcing
represent a large percentage of the supply chain’s cost, thus the optimization
of these elements is of critical importance. Notice that some decisions related
to sourcing and inventory must be taken considering the whole supply chain
including the production, transportation, and distribution decisions. These problems
are well studied in the literature [13–17]. However, less attention has been done to
strategic problems considering a collaborative and integrated point of view. There
are few studied problems in inventory and sourcing from SCM perspective, the
inventory-routing problem [18,19] and the vendor-managed inventory [20] are a few
The manufacturing and resource strategies are associated with the process of
producing a good or a service. Most problems and relevant decisions are related to
the production planning and scheduling, global production assignment, postpone-
ment strategies, resource utilization, and resource investments. Also, related issues
as market forecasts and product design make a great impact on the manufacturing
and resource strategies. Once again, many problems can be defined within this
subject; however, only recently the supply chain perspective has been considered
when defining business strategies for manufacturing and resource use. This broad
strategy leads to larger and complex problems if compared with the traditional
single business perspective. Production planning within a supply chain can be a
very challenging problem, as its solution may affect several elements of the chain,
horizontally and vertically. For example, job scheduling has been mostly applied
to deal with operational decision problems, but its integration with the production
planning decision [21] and among different production plants is not commonly
considered. Their integration with the availability of raw materials, the global
forecasting, and distribution decisions can also be of great interest in the SCM. An
overview of production and scheduling problems in the supply chain can be found
on [22, 23].
Sustainability SCM must be taken into consideration from product design and
production to transportation and waste management. Good decisions in sustainabil-
43 Supply Chain Management 1247

ity and green strategies have a significant impact on the economics and market value
of the business. For a literature review on the implications and interrelationships of
SCM, sustainability, and lean management, we refer to [24]. The environmental
and waste costs are often quite significative. Thus it should be taken into account
in almost all SCM decisions mentioned in this chapter, for example, the impact of
carbon dioxide emissions in transportation strategies. The design of green and lower
environmental impact routes is attracting many researchers [25]. The sustainability
or green strategies and returns management should also be considered in network
design strategies, the latter is known as closed-loop network design, for example,
Devika et al. in [26] apply metaheuristics to solve a similar type of problem
Transportation and distribution strategies are key elements in SCM. The con-
nections among the elements are based on transportation activities or information
interchange. Transportation elements not only permit to connect components in
the chain but also it represents in many cases a substantial overall cost to the
organizations in the chain. Therefore, managers need to have a good understanding
of the transportation system and develop good transportation strategies. To the
development and design of these strategies, several elements must be taken into
account, i.e., transportation costs and performance, transit time and variability,
loss and damage costs, transportation mode, international issues, transportation
outsourcing, and collaborative transportation, just to mention a few. From the
metaheuristic literature, a potential application is the study of the impact of
transportation decisions in the SCM.
Today’s information technologies allow companies to collect vast amounts of
data related to several activities in the supply chain: from demand data to stock
levels data, from the location of the transportation vehicle data to order delivery
status, etc. Information strategies should be carefully considered since the impact
on the business’ performance is significant [27]. In reality, it is difficult to discuss
SCM without mentioning information technologies. The capability of integration,
collaboration, and coordination along a supply chain will not be possible without
the information flow along the network. It should also be easy to understand that a
good use of this information may lead to improvements in the decision-making and
consequently on the overall performance of the business and customer satisfaction
[28]. SCM strategic decisions on information are related to where and which data
should be collected, accessed, storage, analyzed, and shared with other supply chain
elements [28]. Notice that these decisions can affect all optimization problems,
since all of them have the need for high-quality input data [29]. Other significant
problems raised in this activity are related to how to deal with the enormous amount
of available data. Feature selection and classification problems, as well as other
data mining difficulties, must be formulated and solved to improve the information
quality. Thus, metaheuristic techniques are usually an appropriate method to solve
such large problems in a reasonable amount of time, avoiding suboptimizations,
poor data aggregation, and other simplifications procedures. The availability of huge
quantities of data will probably lead to a widespread use of metaheuristics and better
decisions on SCM.
1248 H. Ramalhinho Lourenço and M. G. Ravetti

Several businesses have a worldwide presence, so global supply chain strategy

is a relevant topic in SCM. Companies frequently produce globally but with some
local personalization to improve sales numbers. So, strategic decisions related to
marketing, financial, logistics, distribution, production, and postponement within
a global supply chain can represent high complexity but at the same time make
a great impact on the performance of the elements of the supply chain. Some of
these SCM strategic decisions are, for example, where to produce or store the
goods or how to distribute globally produced products and always considering:
global market characteristics, technological aspects, global costs, and economic and
political scenes [30]. The consideration of all these issues usually leads to very
complex problems and eventually with nonlinear objective functions, where again,
the use of metaheuristics can be extremely useful.
The characteristics of metaheuristics [1] make them one of the best tools to
evaluate different scenarios during strategic decision-making processes. Managers
face complex, integrated, and stochastic problems, and being able to obtain relevant
insights by using optimization methods certainly provides them with a competitive
In the SCM execution area, the well-established supply chain processes as
defined in Croxton et al. [31] are considered. These processes are:

• Customer relationship management

• Customer service management
• Demand management
• Order fulfillment
• Manufacturing flow management
• Supplier relationship management
• Product development and commercialization
• Returns management

Many other processes are suggested in the literature. However, they are quite
similar since all include functional processes in supply, manufacturing, logistics and
distribution, and post-sales.
Next, some examples of decision problems that occur in the abovementioned
processes are briefly described. It is important to remember that the list of problems
is not exhaustive, as the goal is to mention relevant examples with a focus on the
use of metaheuristics.
Customer relationship management (CRM) is a well-established area in SCM
and closely related to marketing. The objective of CRM is to identify target markets
and implement marketing programs with key customers. Most of the literature has
a focus on the marketing area. However, recently, there is an increase number
of applications of operations research and metaheuristics to marketing and CRM
processes. The main reason of this interest is due the increased complexity and di-
mensions of the decision problems, as for example: identification and segmentation
of target customers and optimization of product portfolio, recommendation systems,
and characteristics of the potential clients.
43 Supply Chain Management 1249

Customer service management (CSM) is the coordination structure for managing

the business’ relations with current and future clients. It includes the management
of the sales department and information providers and it must deal with the
communication among all departments and companies within the supply chain that
provide products or services to customers. This process has a strong component of
information systems, and different processes, from inventory problems, assignment
of the corresponding customer support or representative, to optimize the sales team’s
organization. Most examples of applications of metaheuristics in CSM are found in
inventory management, as [32, 33], and also in staff scheduling [34].
The main objective of the demand management process is to meet the customer’s
demand and balance their requirements with the capacities of the organizations
in the chain. This is a crucial process, and one of its essential elements is the
synchronization between the procurement, production, and distribution function to
satisfy customer’s demand and orders. Forecasting plays a major role in this process,
as well as its integration into the resource planning and allocation [35].
The order fulfillment process provides for timely and accurate delivery of
customer orders. One of the most relevant decisions in this process is the well-
known capacitated vehicle routing problem (CVRP) [36]. The CVRP has been
extensively studied in operations research area and is one of the problems with
the largest number of applications of metaheuristic algorithms [37–40]. But from
the SCM perspective, it is important to go beyond the classical CVRP and extend
this problem to take into consideration more aspects within the supply chain. For
example, the collaborative CVRP, that is, where several distribution companies
collaborate to deliver their products [41, 42]. Another example is the CVRP with
environmental and reverse logistics considerations [43, 44]. An important area of
research is also the consideration of inventory constraints and costs in the routing
decisions [18] or rich routing problems as in [45, 46], where metaheuristics have
already been successfully applied.
The manufacturing flow management process is related to the production of the
goods and services to serve the customers, including the moving of products through
the plants and businesses. Within an SCM context, the production planning must
take into account providers and customers, as well as the production capacity of the
organization, differing significantly from the usual individual standpoint. Aspects as
the production flexibility, batch size, cycle time, postponement, make to order, make
to stock, customer order forecast, production scheduling, etc. must be considered
when setting the production flow. Examples of applications of metaheuristics in this
process can be found on [47, 48].
The supplier relationship management is associated with the relationships
upstream in the supply chain and can be seen as a minor image of the CRM.
Some of the important decision problems in this process are the selection of
the right suppliers, cross docking systems, inventory coordination, and planning
between providers and customers. The product development and commercialization
process integrates all necessary activities to develop new products or services
as their introduction to the market. The decision problems in this process are
related to activities in the CRM and fulfillment; therefore issues such as market
1250 H. Ramalhinho Lourenço and M. G. Ravetti

and promotion planning, sales force training scheduling, make or buy decisions,
inventory decisions, transportation planning, or commercialization planning are
relevant. One example is the application of genetic algorithms to design different
product structures considering different product parts, production processes, and
green strategies [49].
The process of returns management is related to the reverse logistics and closed-
loop supply chain processes. Over the last decade, business and academia have
been increasing their attention to this issue due to three main reasons: impact on
the environment and laws forcing the right disposal of products, recognition of the
sustainable issues by the society, and social responsibility by the businesses. The
forward logistics activities are already difficult to plan and optimize. The returns
activities have an increased difficulty due to the stochastic aspect of the “demand.”
For example, if a company uses reused/recycled components in their production,
the collection of these components can vary significantly along the time horizon,
leading to an increased complexity of the production planning. Some applications
of metaheuristics to design closed-loop supply chains have been addressed by [50]
The metaheuristics have already being applied to SCM at the operational level
as it will be discussed in more detail in the next section. However, the need to
consider integration and coordination aspects still exists, and future applications
of metaheuristics to SCM must examine these issues as well as its computational
efficiency and flexibility.

Metaheuristic Algorithms for SCM Problems

In the last years, there have been several applications of heuristics and meta-
heuristics to SCM decision problems. The reasons are quite clear, the increase in
complexity due to the horizontal and vertical integration and the need for quick and
flexible algorithms granted to metaheuristics, a special place in the methodologies
applied to SCM.
In this section, we review relevant publications of heuristic algorithms applied to
SCM problems. Note that the literature review is not exhaustive and readers are also
referred to a recent survey on this topic [51].
In [52], the problem of distribution planning of a network of manufacturing
plants, depots, and customers is analyzed. A heuristic based on an evolutionary
algorithm approach ( Chap. 15, “Genetic Algorithms”) is proposed where the
solution consists in deciding which depots should be considered and how the
product should be distributed from depots to clients minimizing fixed and delivery
costs. The approach considers a bi-level structure; the upper level decides how
the customers are supplied from the depots. The lower level decides on the
manufacturing process.
The problem of coordinating the production schedule and the transportation
of orders is analyzed in [53]. The problem aims to establish the best allocation
of orders specifying, at the same time, their production sequence and completion
times with the objective of minimizing the total cost of the supply chain. Two
43 Supply Chain Management 1251

genetic algorithms ( Chap. 15, “Genetic Algorithms”) are proposed with different
integration strategies, where the best approach allocate more CPU time in solving
the scheduling problem.
Considering a seven-layer recovery network, including primary customers,
collection/redistribution centers, recovery, recycling and disposal centers, and
secondary customers, the problem of recovering products is analyzed in [54]. A
mixed integer linear programming model is proposed to determine the collection
and recycling centers for the logistic of recovered products, minimizing the total
cost. To deal with real-sized instances, the authors propose heuristic approach based
on Tabu search ( Chap. 25, “Tabu Search”), to design and select the best recovery
option while minimizing fixed and variable costs.
Considering the same type of problem, but on a multiobjective approach, Devika
et al. [26] analyzes a general closed-loop supply chain network with six echelons.
They consider the minimization of total costs, the minimization of environmental
impacts, and the maximization of social benefits. Considering two metaheuris-
tics, adapted imperialist competitive algorithm (AICA) and variable neighborhood
search (VNS) algorithm ( Chap. 26, “Variable Neighborhood Search”), three
hybridization approaches are designed and tested against benchmark algorithms and
on a case study. Other examples of quantitative approaches to green SCM can be
found on [55–58].
There are few studies considering the transportation and distribution decisions at
the strategic level. Lourenço and Ribeiro [59] explore the impact of considering
logistics and marketing issues in the design of distribution strategies. Schmid
et al. in [45] describe basic models for extensions of vehicle routing problems
in the context of SCM. These extensions consider other elements in the supply
chain as scheduling, packaging, batching, intermodality, etc. They also describe
an important extension where inventory is considered. The inventory and routing
interconnectivity is a well-known area in the operations research literature; see for
example [18, 60, 61].
Considering a two-echelon supply chain, Cardona-Vales et al. [62] work on a
bi-objective optimization problem, minimizing the cost for opening warehouses and
the expected value of transportation costs and the maximum traveling time through
the whole supply chain. Locations for warehouses and the assignment between
warehouses and distribution centers have to be decided by the actual value of the
demand. To deal with this stochastic problem, a hybrid heuristic based on Tabu
search and GRASP ( Chap. 16, “GRASP”) is designed to consider a multiobjective
The design and evaluation of cooperative purchasing strategies for healthcare
supply chains are evaluated in [63]. The authors propose hybrid heuristic algorithms
based on variable neighborhood search and Tabu search. Considering a set of
hospitals, they want to determine the best cooperation arrangements, to foresee
global and individual savings and organize their joint supply chain to take advantage
from cooperation.
Regarding customer relationship management, several examples of applications
of metaheuristics can be found on market basket analysis [64, 65], product portfolio
1252 H. Ramalhinho Lourenço and M. G. Ravetti

optimization [66], store operation within CRM systems [67], or data mining appli-
cations in CRM [68]. The CRM process is receiving more attention from the SCM
point of view; however, we could observe few publications using metaheuristics. We
identify that there is great potential to apply these techniques to complex problems
in CRM.
Although it is possible to see an increased number of metaheuristic applications
to SCM, there are still several problems to be mathematically formulated. As a
consequence, there is a lack of proper benchmarks and test beds leading to a
deficiency in algorithm comparison and analysis.

Current and Future Research Trends in SCM

Supply chain management will continue to be a relevant topic in the following

years, and the decision-making problems will be growing in quantity, dimension,
and complexity. In this section, current and future research trends in metaheuristics
applied to SCM are discussed. Many of them have not been yet extensively
considered in the metaheuristic research literature.
Main topics:

• Greater integration and collaboration, horizontal and vertical, along with the
supply chain
• Uncertainty decision-making in SCM
• Multiobjective approaches
• E-commerce and SCM
• Online decision-making in SCM
• Open and big data in SCM
• Smart cities and SCM

One of the main characteristics of SCM is the relevance of integration and

collaboration between the elements of the chain. If this integration is not taken
into account, there is not a truly SCM setting. However, most current works do
not always consider these aspects. We conjecture that the main problem is that
incorporating objectives and constraints to model the integration and collaboration
of processes lead to very complex and in many cases nonlinear problems. Still,
models and algorithms in the SCM decision-making must consider these aspects to
obtain a real impact and add value to the business in general.
As previously mentioned, an increase in the dimension and complexity of the
problem is expected. Thus, metaheuristics are certainly a clear option to deal with
this new problem profile, especially when accurate solutions are needed in fast time.
High-performance computing and hybrid methods are clear options to deal with this
increased size and complexity. From the application point of view, cloud computing
algorithms seem to be a good option for medium-sized companies willing to have
access to low-cost distributed algorithms.
43 Supply Chain Management 1253

Efficient decisions in SCM must take into account an important element:

uncertainty. Uncertainty is present all over the supply chain: uncertainty de-
mand, travel times, cost, resource availability, etc. The uncertainty parameters
make it difficult to optimize the system-wide costs and performance in SCM.
The consideration of scenario strategies, robust methods to deal with the pa-
rameter’s uncertainty, will play a major role in helping the decision-making.
For example, a new line of research called simheuristics [69, 70] extends meta-
heuristic capabilities through simulation for solving problems with uncertainty
The need for integration of different elements of the supply chain often leads to
optimization problems where many different objective functions must be assessed.
Therefore, metaheuristics once again present themselves as an excellent option to
efficiently deal with multiobjective problems in a complex environment.
E-commerce is already a reality, and with this new form of commerce had
appeared new decision problems [71]. The e-commerce will be shortly a central part
in many businesses, and this involves not only the retailing companies but also many
other elements integrated into a supply chain, as production and logistics companies.
The need to a fast response in e-commerce is also a reality, so the decision-
making in a supply chain presents a different set of problems than the traditional
The availability of technology and online data, as well as the need for flexibility
and immediate responses, pushes the decision-making processes from an offline
to an online perspective. In this new perspective, we do not count with the whole
instance data but rather a sequence of input portions that must be solved as they
arrive. Thus, online algorithms must take into account the current state of the system
and react as a new portion of information arrives. Once again, the trade-off of
computer efficiency and solution quality has to be carefully analyzed, but due to the
complexity of the problems and the size of real scenarios, metaheuristic approaches
are again promising in this new context.
Open email accounts, Internet search browsers, and mobile phones are just some
of the new ways to capture online consumer’s habit information. This incredible big
amount of data represents an excellent opportunity to find commercial advantages.
The problem is now how to extract good-quality information from these vast
databases that usually cannot fit in regular servers and lacks proper structure [72].
The fact that these databases are relatively open in today’s business increases the
potential of the impact of this information in the SCM. Due to the characteristics
of metaheuristics, these methods have an enormous potential to be applied in SCM
decisions involving big and open data.
Although there are several different definitions of a smart city, the main concept
behind the idea is to consider a city as an integrated system. The available infor-
mation from its infrastructure and dynamical systems are continuously analyzed
for the improvement of all the systems as energy, transport, healthcare, buildings,
etc. [73]. The large amount of sensors and available data have a great impact on
urban supply chain management. The availability of the resources of smart cities
can provide substantial improvements in mobility, sustainability, distribution, and
1254 H. Ramalhinho Lourenço and M. G. Ravetti

many other SCM activities. Notice that in a smart city environment, the decision
problems in SCM will become more complex, with a need for a faster and online
response. For example, retailing companies can identify the closest transportation
vehicles and make collaborative distribution decisions online.
These issues are only some of the actual and future relevant topics that must be
addressed in SCM. Metaheuristics, as one of the available optimization tools, can
provide better quality insights to these important issues in a faster time, improving
significantly the decision making.


An efficient supply chain management is of critical importance in today’s busi-

nesses; if we take into account the market’s globalization and the increasing demand
for flexibility and quality, a good SCM will be vital for the survival of any company.
This chapter reviews the main concepts and decision problems of SCM. The
challenges for obtaining relevant business insights and decisions are associated with
methods in the area of heuristics and metaheuristics.
Decision problems that have arisen in SCM are becoming more complex
and larger; the need for integrating all the elements of the supply chain is an
enormous challenge, as it relates to different objective functions, online decisions,
big databases, and uncertainty data. Thus, this chapter argues that heuristics and
metaheuristics are the most promising tools to solve the decision problems in SCM.
The attributes of metaheuristics, as well as the successful cases mentioned in this
work, support the argument that these methods can address the main challenges of
the actual and future SCM problems.
A larger number of applications of heuristics in metaheuristics to problems in
SCM are foreseeing shortly. The vast amount of available data, the need for more
integration and coordination, the need for online solutions, the consideration of
uncertainty, and many other new constraints will produce a significant amount of
complex decision problems with the need for a fast and efficient solution method.
The use of metaheuristics may provide a significant contribution in SCM from a
theoretical and practical perspective.


 Genetic Algorithms
 Tabu Search
 Variable Neighborhood Search

Acknowledgments H.R. has been supported by the Spanish Ministry of Economy and Compet-
itiveness (TRA2013-48180-C3-P). M.G.R. acknowledges supports from the National Council for
Scientific and Technological Development (CNPq) and FAPEMIG.
43 Supply Chain Management 1255

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