Logistics Optimization in Supply Chain Management using Clustering Algorithms

Abstract

Today’s business environment, survival and making profit in market are the prime requirement for any enterprise due to competitive environment. Innovation and staying updated are commonly identified two key parameters for achieving success and profit in business. Considerably supply chain management is also accountable for profit. As a measure to maximize the profit, supply chain process is to be streamlined and optimized. Appropriate grouping of various suppliers for the benefit of shipment cost reduction is proposed. Data relating to appropriate attributes of supplier logistics are collected. A methodology is proposed to optimize the supplier logistics using clustering algorithm. In the proposed methodology data preprocessing, clustering and validation process have been carried out. The Z-score normalization is used to normalize the data, which converts the data to uniform scales for improving the clustering performance. By employing Hierarchical and K-means clustering algorithms the supplier logistics are grouped and performance of each method is evaluated and presented. The supplier logistics data from different country is experimented. Outcome of this work can help the buyers to select the cost effective supplier for their business requirements.