  While consolidation strategies form the backbone of many supply chain
optimisation problems, exploitation of multi-tier material relationships
through consolidation remains an understudied area, despite being a prominent
feature of industries that produce complex made-to-order products. In this
paper, we propose an optimisation framework for exploiting multi-to-multi
relationship between tiers of a supply chain. The resulting formulation is
flexible such that quantity discounts, inventory holding, and transport costs
can be included. The framework introduces a new trade-off between tiers,
leading to cost reductions in one tier but increased costs in the other, which
helps to reduce the overall procurement cost in the supply chain. A mixed
integer linear programming model is developed and tested with a range of small
to large-scale test problems from aerospace manufacturing. Our comparison to
benchmark results shows that there is indeed a cost trade-off between two
tiers, and that its reduction can be achieved using a holistic approach to
reconfiguration. Costs are decreased when second tier fixed ordering costs and
the number of machining options increase. Consolidation results in reduced
inventory holding costs in all scenarios. Several secondary effects such as
simplified supplier selection may also be observed.
