Optimizing global flows: a study of the compact fluorescent lamps' supply chain from China to Europe

European countries are paying more attention to environment issues than ever before. Demand for products like energy saving lamps is growing very fast in recent years. Meanwhile, to increase the product margins European companies source most of the products from China because of the much lower cost. Because of outsourcing activities, companies are also facing lots of challenges in dealing with problems which could happen in the long Supply Chain. This project is carried out at Philips Lighting, the world's leader in Lighting business, to improve the Supply Chain performance of Compact Fluorescent Lamps Integral (CFLi). The goal of the project is to improve the Supply Chain performance for different subchains for CFLi lamps and key components. This report presents a standardized procedure to set up safety stock which is needed to buffer the demand fluctuation. Then, for CFLi lamps which are sourced from China, Forecast Based approach is chosen to calculate the amount of safety stock to cover the cumulative forecast uncertainty. For CFLi lamps which are produced in Poland, Standard approach is selected. Different scenarios analyses reveal the impacts of different Supply Chain parameters on safety stock. In addition, an optimization of CFLi drivers' flow is proposed and discussed.