Tactical planning in supply chain networks with customer oriented single sourcing

Purpose – The purpose of this paper is to focus on the medium‐term planning problem in supply chain networks. Based on a literature review, a comprehensive analytical planning model for the three echelon tactical planning problem in supply chain networks is developed which is applicable in a hierarchical planning frame. Design/methodology/approach – The approach used was mathematical mixed integer programming to model three echelon production‐distribution networks embedded in the supply chain planning matrix frame. Application of the model in a multi‐site planning process based on a case study from the industrial transformer supply chain was also undertaken. Findings – Integrated multi‐period medium‐term planning with customer oriented single sourcing is an efficient method to implement mathematical optimal solutions in practice as it provides comprehensive tactical plans and network designs. These can be used for scenario analysis in a coordination process with independent supply chain partners. Research limitations/implications – The implementation of a mathematical optimal plan in a complex business network structure requires a big‐bucket model solution to grant the plan's stability via sufficient time buffers. Originality/value – The paper displays development of a multi‐period three echelon tactical production‐distribution‐transportation model with different capacities, transportation modes, product types and single sourcing decisions.