Procurement Costs Research Articles

Rational Use of Energy in Sports Centres to Achieve Net Zero: The SAVE Project (Part A)

Sports centres constitute major energy consumers. This article presents the proposed energy performance upgrade process and the achieved results for the municipal sports centre in Arkalochori, Greece. The facility consists of a swimming pool centre, an outdoor 8 × 8 football court, and two tennis and basketball courts. It operates with considerably high energy consumption due to the lack of any measure towards its energy efficiency improvement since its initial construction in 2002. Due to the significantly high heating cost, the swimming pool centre remains operative only during the summer period. The energy performance upgrade of the facility was holistically approached through all possibly applicable passive and active measures: insulation of opaque surfaces and replacement of openings, construction of a new, bioclimatic enclosure for the swimming pool’s centre and conversion of the current outdoor facility to an indoor one, installation of heat pumps for indoor space conditioning and swimming pool heating, installation of a solar–combi system for domestic hot water production, upgrade of all indoor and outdoor lighting equipment and installation of a photovoltaic plant on the new enclosure’s roof for the compensation of the remaining electricity consumption. With the proposed measures, the municipal sports centre is upgraded to a zero energy facility. The payback period of the investment was calculated at 14 years on the basis of the avoided energy procurement cost. The swimming pool’s centre operation is prolonged during the entire annual period. This work has been funded by the Horizon 2020 project with the acronym “NESOI” and was awarded the public award of the “Islands Gamechanger” competition of the NESOI project and the Clean Energy for EU Islands initiative.

Considering region risks and mitigation strategies in the supplier selection process for improving supply chain resilience

This study applies combinations of mitigation strategies (including multi-region supplier, multi-sourcing, reserved inventory, and alternative shipment) in supplier selection, taking into account two types of disruptions: a decline in supplier capacity and transportation failure. This study adopts a two-phase decision-making model to formulate a resilient supplier selection process, supported by suitable mitigation strategies. The first phase selects the main supplier process using the augmented ε-constrained and analytic hierarchy process method to find the maximum supplier performance on resilient-sustainable criteria and minimum supplier location risk. The second phase implements mitigation strategies when allocating orders to the main suppliers using linear programming to find how many units to order at the lowest procurement costs. Eight strategy combinations are utilized in the numerical study with several regional disruption scenarios. This study shows that by combining strategies, the company may minimize its reliance on backup suppliers while improving the supply chain resilience, collaboration with main suppliers, and service level. The findings demonstrate the strategy combination's effectiveness in terms of economic benefits, reduced lost sales, and decreased variability of orders to main suppliers.

Factors Affecting the Cost Savings Rate of University Procurement

The procurement function is an essential part of a university’s operations, as it provides the necessary goods and services for academic and administrative activities.This paper explores the impact of different demand channels on cost savings rate in university procurement. Through surveying and analyzing the demand channels used in university procurement, this study finds that the use of multiple demand channels can improve procurement efficiency and performance, and help reduce procurement costs. Moreover, the quality of communication and information sharing between universities and suppliers, as well as the level of competition among suppliers for procurement contracts, affect the cost savings rate. The findings of this study will also provide important implications for university procurement practices, by helping universities make more informed decisions regarding the selection of procurement demand channels. Ultimately, the goal is to improve the efficiency and effectiveness of university procurement practices, which can lead to cost savings, improved procurement outcomes, and increased value for money.

Electricity procurement of large consumers considering power-purchase agreements

In an environment with high energy costs worldwide, the adequate determination of electricity procurement strategies by large electricity consumers is vital. This study intends to determine the best procurement strategy for electricity consumers by considering their participation in the pool and the possibility of signing different types of power purchase agreements, which can be physical/financial, on-site/off-site, with conventional/renewable energy suppliers. Additionally, the construction of a photovoltaic self-production unit is considered. This medium-term decision-making problem is formulated using a stochastic programming approach. A realistic case study is solved by considering an existing cement producer, actual pool price and renewable production data pertaining to the Spanish power system. The numerical results indicate that a risk-averse strategy obtained by the proposed model can maintain an increase in the procurement cost below 9% in a situation in which pool prices are 3.3 times higher.

Optimization of Inventory Inflation Budget Based on Spare-parts and Miscellaneous Costs of a Typical Automobile Industry

Brainstorming has been a common approach in many industries where the result is not always accurate, especially when procuring automobile spare parts. This approach was replaced with a scientific and optimized method that is highly reliable, hence the decision to optimize the inventory inflation budget based on spare parts and miscellaneous costs of the typical automobile industry. Some factors required to achieve this goal were investigated. Through this investigation, spare parts (consumables and non-consumables) were found to be mostly used in Innoson Vehicle Manufacturing (IVM), Nigeria but incorporated miscellaneous costs to augment the cost of spare parts. The inflation rate was considered first due to the market's price increase. Different types of vehicles were used to implement the Non-preemptive goal programming model and to predict the cost of procurement of the spare parts and miscellaneous and the profit for the current year. The result proved that the solution did not fully achieve the goals since the objective function is not equal to zero, but deviations for going below the profit goal and above the cost of procurement goal were significantly minimized.

Dual sourcing systems: An asymptotic result for the cost of optimal tailored base-surge (TBS) policy

We study the problem of managing an inventory system with two supply sources which differ in their lead times and unit prices. We consider a simple class of policies called Tailored Base-Surge (TBS) policies for managing this system. These policies order a constant amount in every period from the slow supplier and order up to a target level in every period from the faster and more expensive supplier. We prove an asymptotic convergence result on the cost of an optimal TBS policy as the unit inventory holding cost goes to zero while keeping the service level constant and simultaneously increasing the unit cost of procurement from the faster supplier. The asymptotic value of cost also serves as an upper bound on the optimal cost of all dual sourcing systems with the same service level and product of unit procurement and holding cost. This bound is better than the previously best known upper bound on the cost of an optimal dual sourcing policy in the same regime.

Research on risk management and control strategy of uranium resource procurement in China

ABSTRACT As the scale of nuclear power in China continues to expand, the problem of external dependence on uranium resources has become more and more prominent. The guarantee of uranium resources is facing great risks, especially the procurement risks. Therefore, the procurement risks of uranium resources based on the analytic hierarchy process and fuzzy comprehensive assessment method from multiple perspectives is analyzed in this paper. The results show that the risk values of target region selection, supplier selection and uranium mining are 73.6, 71.3 and 71.8 respectively, which are the main risks. The risk values of procurement contract and procurement cost are 69.3 and 67.5, which are relatively low. They can be regarded as the secondary risks. In addition, the countermeasures of uranium resource procurement risk are put forward from six aspects including risk mitigation, risk prevention, risk transfer, risk avoidance, risk retention and risk backup measures. It is helpful to guide the risk management of China’s uranium resources in procurement and transportation activities

A Systematic Procurement Supply Chain Optimization Technique Based on Industrial Internet of Things and Application

Smart manufacturing has become mainstream in the development of manufacturing industry, where Industrial Internet of Thing plays a critical role. In this paper, a systematic intelligent technique for procurement supply chain optimization is proposed. In this technique, an integrated approach based on variational mode decomposition and long short-term memory network is used to predict the market price. Considering the factors such as production plan and market fluctuation, a multi-period dynamic purchasing model is built. A stacked autoencoder under bootstrap aggregation is then trained to evaluate suppliers automatically end-to-end based on various data. Finally, a multi-objective order allocation model is established considering the procurement costs and supplier scores, and solved by particle swarm optimization. The extensive experiments are performed using a realistic industrial application in a zinc smelter company. The experimental results demonstrate that the proposed technique greatly reduces labor costs, improves the efficiency of procurement supply chain, and reduces the procurement costs of the company.

NAVIGATING TRADE PROTECTIONISM: ITS IMPLICATIONS ON GLOBAL PROCUREMENT ACTIVITIES AND THE NIGERIA AND U.S. ECONOMY

This paper examines the implications of trade protectionism on Nigeria’s economy, with a particular focus on the sectors that heavily rely on exporting oil and gas products to the United States (U.S). Conversely, the U.S. occasionally resorts to restrictive measures to defend domestic industries against competitive Nigerian imports, primarily to conserve domestic employment and promote indigenous innovation The reliance on oil exports also poses challenges for Nigeria’s diversification efforts and its ability to develop other sectors of the economy. In recent years, there has been a growing trend of protectionist measures implemented by countries around the world, which has the potential to disrupt global supply chains and affect international trade. As a major oil exporter, Nigeria is vulnerable to global oil price changes, and any increase in trade barriers, such as tariffs or quotas, could have significant implications for the country’s overall economic growth. Historically, nations have adopted protectionist strategies to shield domestic industries, ensure economic stability, and protect employment. However, the rise in such measures in recent years has disrupted global supply chains, inflating procurement costs and imposing challenges to businesses that rely heavily on international sourcing. In navigating this convoluted trade milieu, the paper proposes a set of adaptive strategies. Emphasis is placed on the endorsement of regional trading blocs, advocating the benefits of memberships like ECOWAS for Nigeria and NAFTA/USMCA for the U.S. Such affiliations can serve as buffers against global protectionist winds. Furthermore, harnessing technology in procurement operations is underscored as a critical tool for businesses, aiding in the mitigation of potential disruptions and costs instigated by protectionism. In conclusion, while trade protectionism addresses certain immediate national concerns, its cascading effects on global procurement and specific bilateral relations mandate an informed, strategic response to ensure sustained economic growth and stability.

Supply diversification under random yield: The impact of price postponement

Supply diversification and pricing are two common mechanisms for dealing with supply yield uncertainty. This paper characterizes a firm's pricing and sourcing decisions under supply yield uncertainty, and studies the interplay between the two mechanisms. We compare the optimal sourcing decisions under two distinct pricing schemes: (1) ex ante pricing—the firm simultaneously makes the sales price and sourcing decisions before production takes place; (2) responsive pricing—the pricing decision is postponed until after the production yield realization. Although the firm is better off with responsive pricing, the effect of price postponement on the optimal sourcing decision and the firm's need for supply diversification varies and is influenced by factors such as unit procurement cost, supply portfolio, and supply reliability. For the case of one unreliable supplier, we show that responsive pricing mitigates the overage and underage risks imposed by yield uncertainty, and results in a lower optimal order quantity than that under ex ante pricing when the procurement cost is low, and a higher quantity otherwise. For the case of two unreliable suppliers, we show that responsive pricing promotes supply diversification when the sole‐sourced supplier's reliability is low, and discourages when it is high. By contrast, when the sole‐sourced supplier's reliability is moderate, responsive pricing promotes supply diversification when its unit procurement cost is low and discourages otherwise. The composition of supply portfolio also has a fundamental impact on such strategic interplay: When the supply portfolio consists of one unreliable and one reliable supplier, diversified sourcing is never optimal under ex ante pricing, but may be optimal under responsive pricing. Thus, responsive pricing promotes dual sourcing in this setting. We also conduct comprehensive numerical experiments to both confirm the robustness of the main results and derive additional insights.

Better Than Ice: Advancing the Technology of Donor Heart Storage With the Paragonix SherpaPak.

Better Than Ice: Advancing the Technology of Donor Heart Storage With the Paragonix SherpaPak.

An optimization approach for the economic dispatch incorporating renewable energy resources into Lesotho power sources portfolio

Electricity demand in Lesotho has surpassed the main domestic generation of 72-MW hydropower station with 59% capacity deficit currently met by imports from South Africa and Mozambique through costly fixed bilateral contracts. With the abundant renewable energy sources in Lesotho, independent power producers could be incentivized to erect solar PV plants and wind farms to increase local energy security at lower cost and diversify utility's power mix. This article develops a power dispatching approach that prioritizes solar PV and wind generators to aid hydropower station meet demand and only be backed by imports. It uses the Monte Carlo approach to simulate generation adequacy analysis in order to establish monthly average expected demand not supplied (EDNS) and loss of load probability (LOLP) for the baseline case and three dispatch scenarios. According to the analysis, the EDNS for all simulated scenarios never drops to 0 MW, while the LOLP only reaches a minimum of 52% for the scenario with all local renewable energy generators combined. Furthermore, main grid energy imports can be minimized by 22.3% with the introduction of 50-MW solar PV and by 40.2% for 58-MW wind farms. A 59.7% minimization can be obtained by combining solar PV at 50-MW, wind farms at 58-MW and MHP at 72-MW. These introductions would lead to subsequent reductions in power procurement costs of about 6.2% for solar PV alone and 1.11% for both solar PV and wind. However, the inclusion of wind energy alone would lead to slight cost increase of about 0.6%.

Modelling supplier selection and material purchasing for the construction supply chain in a fuzzy scenario-based environment

Mathematical relations between supplier capacities, the resulting material supply shortages, together with the impact of material delays on construction projects are not well defined. In response to this, this paper presents a novel multi-objective mixed integer linear programming model that considers the selection of suitable suppliers, inventory management practices, order quantities and the possibility of splitting a material order as integrated decisions to be optimised. The trade-off between the overall procurement cost and the weighted lateness, a measure of material delay impacts, is optimised. Material prices, supplier capacities, and resulting delays are treated as fuzzy scenario-based parameters. The proposed model is tested on a numerical example and computation experiments validate the model performance. An extensive sensitivity analysis is carried out and results suggest that by considering high variations in uncertain supplier capacities, the model would generate lower procurement cost and show less significant delay impacts. Whereas greater variations in uncertain material prices cause the total procurement cost to grow 55%; greater variations in uncertain delay durations also drastically increase the weighted lateness by over 70%. This highlights the importance of having high quality estimates for uncertain parameters. Additionally, the analysis also indicates that a minimum overall satisfaction level of 0.9338 can be achieved depending on the model user's strategies, and the proposed scenario-adjusted problem outperforms problems modelled under deterministic market conditions. The major contribution of this paper lies in the development of a fuzzy scenario-based model to solve the supplier selection and material purchasing problem in construction supply chains.

Application of Metallic Iron and Ferrates in Water and Wastewater Treatment for Cr(VI) and Organic Contaminants Removal

Iron species can act as electron donors, electron acceptors or serve as a sorbent to co-precipitate contaminants. These properties, along with its relatively low cost as a material, make iron an ideal compound for environmental applications in the removal of pollutants from water and wastewater. This study assesses the use of metallic iron as a reductant for the removal of toxic Cr(VI) from aqueous solutions, as well as the use of hexavalent iron (ferrates) for the removal of organic compounds, turbidity and biological contaminants from water and wastewater. Laboratory-scale experiments show that the Cr(VI) removal efficiency of metallic iron filling materials, such as scrap iron fillings, via reduction to Cr(III) and the subsequent precipitation/filtration of aggregates can reach values over 99.0%. Moreover, the efficiency of ferrates, in situ synthesized via a low-cost Fe0/Fe0 electrochemical cell, in the removal of organic compounds, turbidity and biological contaminants from high-strength industrial wastewater, biologically treated wastewater and natural water can also reach values over 99.0%. The results showed that iron species can be applied in low-cost and environmentally friendly technologies for natural water remediation and wastewater treatment. Furthermore, the study showed that the challenge of an iron material’s surface passivation, as well as of ferrates’ procurement cost and stability, can be resolved via the application of ultrasounds and via in situ ferrate electrosynthesis.

Same-teams versus different-teams for long distance lung procurement: A cost analysis.

In an era of broader lung sharing, different-team transplantation (DT, procuring team from nonrecipient center) may streamline procurement logistics; however, safety and cost implications of DT remain unclear. To understand whether DT represents a safe means to reduce lung transplant (LTx) costs, we compared posttransplant outcomes and lung procurement and index hospitalization costs among matched DT and same-team transplantation (ST, procuring team from recipient center) cohorts at a single, high-volume institution. We hypothesized that DT reduces costs without compromising outcomes after LTx. Patients who underwent DT between January 2016 to May 2020 were included. A cohort of patients who underwent ST was matched 1:3 (nearest neighbor) based on recipient age, disease group, lung allocation score, history of previous LTx, and bilateral versus single LTx. Posttransplant outcomes and costs were compared between groups. In total, 23 DT and 69 matched ST recipients were included. Perioperative outcomes and posttransplant survival were similar between groups. Compared with ST, DT was associated with similar lung procurement and index hospitalization costs (DT vs ST, procurement: median $65,991 vs $58,847, P=.16; index hospitalization: median $294,346 vs $322,189, P=.7). On average, procurement costs increased $3263 less per 100 nautical miles for DT versus ST; DT offered cost-savings when travel distances exceeded approximately 363 nautical miles. At our institution, DT and ST were associated with similar post-LTx outcomes; DT offered cost-savings with increasing procurement travel distance. These findings suggest that DT may mitigate logistical and financial burdens of lung procurement; however, further investigation in a multi-institutional cohort is warranted.

Grid Impact Aware TSO-DSO Market Models for Flexibility Procurement: Coordination, Pricing Efficiency, and Information Sharing

This paper proposes five market models for the procurement of flexibility by transmission (TSO) and distribution system operators (DSOs), based on several TSO-DSO coordination schemes, including a disjoint distribution, disjoint transmission, common, fragmented, and multi-level market. The properties of these models are then analyzed. In particular, the common market is first proven to be more efficient than the other market models. Then, different methods are proposed to adequately price TSO/DSO interface flows, when procuring cross-grid flexibility. It is then shown that, when interface flows are optimally priced, the fragmented and multi-level market solutions converge to those of the common market, reaching optimal efficiency. To prevent the need for any network information sharing among system operators in the different coordination schemes, decomposition methods based on bi-level programming and the alternating direction method of multipliers (ADMM) are proposed. A developed case study, considering an interconnected transmission-distribution system, corroborates the mathematical findings by highlighting the greater efficiency of the common market, the effect of adequate interface pricing on reducing procurement costs, and the capability of the decomposition methods to reach optimal market solutions with limited information exchange.

Evaluating Current Increased Price and Fattening Cost of BX Cattle with ESCAS Cost on Slaughtered Cattle Price and their Welfare

The Australian Brahman Cross (BX) cattle industry is very modern. They have created a comprehensive system guided by the principles of animal welfare. The importation of BX cattle by companies in Indonesia will be bound by the Exporter Supply Chain Assurance System (ESCAS) regulations. This study aimed to evaluate the current increased price and fattening cost of feeder Brahman Cross (BX) cattle along with ESCAS additional cost on the price of slaughtered cattle and their welfare. Based on the results, the animal welfare assessment in the feedlot for 120 days were considered good, with the average value in the first month 86.40%, then in the second month 88.50%, in the third month 92.14%, and the fourth month 94.29%. Based on the calculations result of the Activity Based Costing (ABC) method in each supply chain, it is known that procurement costs, including the purchase of feeders, contributed to 94,0% of the total costs, while other costs were handling costs 2.70%, cost of ESCAS 1.56%, selling cost 1.52%, and the lowest, maintenance cost 0.24%. Therefore, to fatten Australian BX cattle, special strategies are needed, such as: optimizing stock in the feedlot; efficiency cost in feed ingredients without reducing quality; applying animal welfare rules to minimize handling costs and selecting vendors who want the lower price in providing ESCAS support facilities and establishing regular maintenance of the ESCAS supporting tools.

Public health supply chain for iron and folic acid supplementation in India: Status, bottlenecks and an agenda for corrective action under Anemia Mukt Bharat strategy.

The IFA supplementation program under the Anemia Mukt Bharat (AMB) program is one of the most ambitious nutrient supplementation programs in India. The delivery of services often suffers due to frequent stock outs and shortages. It is critical to understand the bottleneck in the supply chain adversely affecting the performance and coverage of the program. The paper attempts to identify the bottlenecks of the IFA supply chain in key areas of supply chain i.e., forecasting, procurement, warehousing and inventory management, transportation, distribution, logistic information system and suggests a plan of action aimed at ensuring uninterrupted supplies to the end beneficiaries. The data source for the present paper is the nationwide IFA Supply Chain Assessment (2018-19) conducted across 29 Indian states with a total of 58 districts, 116 blocks, 232 Sub-Centres, 232 Anganwadi centres and 232 schools covered under the assessment as a multi-partner collaborative initiative. Field insights from supply chain strengthening interventions under different public health programs in India and other developing countries were taken to arrive at corrective actions and recommendations. Findings were disseminated to government and an action plan was suggested for connecting service delivery points through an app-based system, developing a micro plan for ensuring fixed distribution schedule, followed by continuous monitoring and review meetings identified for follow up. The average lead time across states was 35 weeks with top three performing states being Goa, Sikkim, and Telangana. The average per unit cost of procurement was Rs 0.35 for IFA Red, Rs 0.25 for IFA Blue, Rs 0.31 for IFA Pink and Rs 7.30 for IFA syrup. Out of the 704 districts in India, only 213 has IFA Red, only 140 had IFA Blue, 152 had IFA Pink and 163 had IFA Syrup available in four quarters of 2018-19. The key issues identified in the assessment were-a lack of standardized forecasting process, absence of inventory management techniques, no fixed distribution schedule, inadequate availability of transport vehicles and an absence of an integrated MIS. The identification of bottlenecks in the IFA supply chain and its impact on the performance of the supply chain would provide policy guidelines for the government as well as development partner agencies to design an effective and efficient supply chain. It would also enable the policy planners to understand the challenges associated with managing different components of a supply chain, their interrelation and impact on the overall performance of the supply chain. The suggested recommendations would equip program managers with the tool to devise and implement field level solutions.

Livestream e-commerce in a platform supply chain: A product-fit uncertainty reduction perspective

Livestream e-commerce involves broadcasters introducing, demonstrating, and selling goods while interacting with online audiences in real time via digital devices. In recent years, the livestream e-commerce industry has witnessed explosive growth. This paper establishes a stylised model of the livestream e-commerce supply chain and incorporates a salient feature of livestream selling, i.e., the livestream enables a reduction of the product-fit uncertainty for consumers. We obtain the optimal pricing decision for the seller and characterise the supply chain firms' profits when the platform's commission rate is exogenous. Two crucial parameters are identified in this scenario, i.e., the consumers' hassle cost to watch livestream and the seller's effective procurement cost. It is found that both the seller and platform prefer adopting livestream when the consumer's hassle cost is low and the effective procurement cost is high, and the seller has a stronger tendency to adopt livestream than the platform. We also investigate the problem under the endogenous platform's commission rate, revealing that the platform's optimal commission rate with livestreams should be higher than that without livestreams unless the consumer's hassle cost is considerably large and the seller's procurement cost is considerably small. Another result different from the scenario of the exogenous platform's commission rate is that a selling mode choice inconsistency occurs when the product's procurement cost and consumer's hassle cost are both very low, in which case, the platform prefers the seller to use livestream selling, whereas the seller prefers not to do so.

Gains and Losses of Key Opinion Leaders’ Product Promotion in Livestream E-commerce

In livestream e-commerce, many brand-owners use the key opinion leaders (KOLs) for product promotion and sales, especially in the direct-selling channel. Is such a practice really beneficial to the brand-owner? In practice, we even observe that KOLs sell and then return products for a strong network externality. Therefore, to formulate the brand-owner's tradeoffs of using KOLs, we compare the brand-owner's profits with and without a KOL (i.e., brand-owner uses a KOL for product promotion vs. brand-owner invests in product promotion by itself) in a dual-channel system comprised of the brand-owner's direct-selling channel and its traditional retail channel. We find the brand-owner's gains/losses of using the KOL highly depend on the commission rate, retain rate and the network externality intensity. Interestingly, we reveal that the enhanced KOL effect might not be necessarily beneficial to the brand-owner and can even hurt it significantly. As the channel rival, the retailer may benefit from the brand-owner's using the KOL (because its procurement cost may be lowered) and the market expansion (because the use of KOL may spill over to the retail channel).