Designing a Supply Chain Management System

Supply chain systems coordinate procurement, inventory, and logistics across a complex network of suppliers and warehouses.

System Components

Supplier Portal  →  Procurement
                       ↓
               Inventory Management
                       ↓
              Warehouse Management
                       ↓
              Fulfillment & Logistics
                       ↓
                  Customer Delivery

Inventory Tracking

inventory(
  sku_id, warehouse_id,
  quantity_on_hand,
  quantity_reserved,    -- Allocated to orders
  quantity_in_transit,  -- En route from supplier
  reorder_point,        -- Trigger replenishment
  reorder_quantity
)

available = quantity_on_hand - quantity_reserved

Reorder Automation

Monitor inventory continuously:
  IF quantity_on_hand <= reorder_point:
    Create purchase order
    Send to preferred supplier
    Set quantity = reorder_quantity

Dynamic reorder point:
  Reorder point = avg_daily_demand × lead_time + safety_stock
  safety_stock = Z × σ × √lead_time

Demand Forecasting

Inputs:
  Historical sales (2 years)
  Seasonality patterns
  Upcoming promotions
  Market trends

Models:
  ARIMA for time-series
  Prophet for seasonality
  ML for complex patterns

Output: Expected demand per SKU per warehouse per week

Multi-Warehouse Fulfillment

Order arrives:
  1. Check all warehouses with stock
  2. Calculate: shipping_cost + handling_cost per warehouse
  3. Select optimal: lowest cost OR fastest delivery
  4. Split order across warehouses if needed

Logistics Optimization

Vehicle Routing Problem (VRP):
  N deliveries to make
  K vehicles available
  Find: Minimum cost routes

Solutions: Nearest neighbor, Clarke-Wright, Google OR-Tools

Supplier Scorecard

KPIs per supplier:
  On-time delivery rate: > 95%
  Quality defect rate:   < 0.5%
  Lead time accuracy:    ± 2 days
  Price competitiveness: vs market

Automatic supplier ranking drives PO assignment

Conclusion

Supply chain systems optimize across cost, time, and reliability dimensions simultaneously. Event-driven inventory tracking, ML forecasting, and VRP-based logistics are the core optimization levers.